President Nana Addo Dankwa Akufo-Addo must be ashamed for slapping bondholders with haircuts on their investments despite promising not to do so earlier.
That’s the view of the Coordinator of the Third World Network Africa, Dr. Yao Graham.
For him, that comment made by the President should have rather been an acknowledgement of the current economic crisis and an appeal for all hands on deck to help Ghana reach public debt levels that are manageable.
“That broadcast that the President made and said there will be no haircut, he must be embarrassed by what is going on. That speech, in my view, should have said that there is a crisis that will require sacrifices from all of us and force us as a government to rethink the way we do business to reduce public expenditure. That is legitimate. With that, everyone is on board. It will not be easy, but it would have improved the climate”, he said on the Point of View on Citi TV.
Dr. Yao Graham thinks the highly fought Domestic Debt Exchange programme is politically destructive in its current form.
He also blames the Finance Minister for the programme’s poor handling due to a lack of consultations with key players in the sector and says the government should be ashamed of the obvious case of ineptitude.
“Really, the Finance Minister has been very arrogant, especially in his relationship with the victims of this exercise. The changing of the dates and terms is also a statement of incompetence–that he didn’t think through and engage properly. This is more embarrassing. The DDEP has really hammered the legitimacy of this government. It is also a political disaster.”
Following an economic downturn and difficulties in servicing its debt, the government implemented the domestic debt exchange programme to give itself more time to meet its fiscal obligations.
Without the debt exchange programme, according to the government, the country will suffer a severe economic collapse.
The $3 billion rescue package from the International Monetary Fund is also contingent upon the Government of Ghana completing the debt restructuring.
“Getting to a sustainable debt level is necessary, but many people will tell you that domestic debt restructuring because of its systemic implication for the country, is not advisable. So in general, the thing is to focus on your external debts”, Dr. Graham added.
Although the government has reaffirmed that participation in the programme is completely optional, there have been protests and pleas to exempt particular categories of bonds from the debt swap programme.
“All this resistance of the banks, pensioners tells you of the implications. In front-loading the debt exchange as the primary step and being very resistant to legitimate demands from citizens, we need to take a look at public finance; how much is coming in and how it is being spent for value and how things can be postponed. The resistance to that conversation is very striking”.
“In all these things, the President is prioritizing money that will go into a national cathedral. People have a sense of waste and corruption and to get the sense of it to be ready to make sacrifices, that discussion seems not to be on the table. That does not create trust for a start and to get people to make sacrifices, you need to build trust for your programme”, the Third World Network Africa Coordinator added.
