2023 Budget: Government's plan to borrow GHS61 billion doesn’t make sense – Joe Jackson

Financial Analyst, Mr. Joe Jackson has stressed that the government must focus on cutting more expenditure if indeed it recognises that times are hard.

According to him, the plan by government to borrow some GHS61 billion in the 2023 Budget is wrong.

Insisting that the plan does not make sense to him, Joe Jackson adds that government needs to do more to show it is willing to share the pain of the Ghanaian citizenry in the midst of the economic crisis.

“The government must also cut expenditure, this is about cutting expenditure too. At the moment, I don’t think the government has cut enough expenditure. Next year’s budget we are still borrowing GHS61 billion.

“That doesn’t make sense to me, that is not a nation in austerity. The government must cut expenditure, they must show that they are willing to bear the pain,” Joe Jackson shared in an interview with TV3.

Commenting on the Debt Exchange Programme announced by Minister of Finance Ken Ofori-Atta, the Financial Analyst said it is obvious that smaller investors will be hard hit.

“At this moment, individuals who were wealthy enough to buy bonds in their own names are not being touched, Treasury Bills are not being touched. It is corporates that are being touched.

“Unfortunately, the smaller investor who is not rich enough to buy bonds in his name is now indirectly, being affected because that investor joined a corporate investment scheme, and the scheme being a corporate entity has been affected by the haircut,” Joe Jackson noted.

He added, “At this moment, you have got to accept it and move on however bitter the pill is, however unfair the pill is, however angry we feel about the pill.”

Under the Debt Exchange Programme announced by the Finance Minister, domestic bondholders will be asked to exchange their instruments for new ones. Existing domestic bonds as of 1st December 2022 will be exchanged for a set of four new bonds maturing in 2027, 2029, 2032, and 2037.

The annual coupon on all of these new bonds will be set at 0% in 2023, 5% in 2024, and 10% from 2025 until maturity whilst coupon payments will be semi-annual.