Fiscal readjustment can give you over GHS100 billion each year; scrap Domestic Debt Exchange Programme – Government told

Since December 2022, particularly after the government of Ghana introduced the Domestic Debt Exchange Programme (DDEP) following the Staff-Level Agreement with the IMF, there have been heightened agitations in the country.

The controversy gave birth to Economic Governance Platform (EGP) which has been proposing some alternatives to government at its recent forum.

Instead of resorting to a fourth debt restructuring programme in the country’s history, which will inflict more hardships on creditors, it noted that government must focus on fiscal readjustment and effective revenue mobilisation.

Moderated by Bernard Koku Avle, General Manager of Accra-based Citi FM/TV, the discussion was graced by astute economists such as Prof. Godfred Bokpin, Dr. Patrick Assumin, Dr. John Kwabena Kwakye, and Dr. Theophilus Acheampong.

The discussion held at the Ghana Academy of Arts and Sciences on Thursday, January 26, was geared toward examining the negative impacts the DDEP will have on creditors as well as the possible alternatives government can employ to sustain its debt and resolve the financial crisis.

The panel admitted to the fact that the programme will aid in achieving economic sustainability but added that it is not the only way out.

In a presentation, Prof. Godfred Bokpin revealed that the nation’s current economic crisis traces its roots to ineffective fiscal structure; hence, there is a need to readjust fiscal policy and effective revenue mobilization.

The panel, in unison, reaffirmed the Individual Bond-Holders Forum’s report, which noted that fiscal readjustment and expenditure alone will give the country over GHS100 billion a year, which can be more useful for the government’s effort in restoring the economy without needing the DDEP.

In the said report, the Individual Bond-Holders Forum also recommended that the government "lend the US$900 million Ghana Heritage Funds to the Bank of Ghana to shore up the reserves.

"Restructure the fiscal council to include a creditors committee made up of representatives from all investor classes in GoG local bonds and empower the council to be an enforcing and binding institution and not just an advisory body. This may be the key to ensuring and sustaining the fiscal discipline required to realise our debt sustainability.”

Prof. Bokpin hinted that the DDE programme is estimated to generate approximately GHS 117 billion for the country each year, meaning the economy will probably regain some strength in the financial space.

However, the economic lecturer said the government cannot be trusted to manage such money since it is known for misusing funds.

"The government may generate GHS 117 billion from creditors through the Domestic Debt Exchange Program each year.

“The programme will be helpful in structuring the country’s economy. However, if it is allowed to be implemented like this, many people will run into politics to amass themselves with illegitimate wealth and soon bring the country back to a debt crisis," he said.

"By then, the government of the day will run back to reintroduce the programme (DDEP) and use it as an escape route for their actions, which will only make innocent Ghanaians suffer," he added.

Bringing the discussion to an end, Dr. Kwakye said, among others, that the 15-year maturity period proposed in the DDEP must be reduced and individual bondholders excluded from it.

On his part, Dr. Assumin advocated for the discussion to be broadened to touch on all the country’s challenges to help inject some positive changes into the financial system.

Mr. Abdul Karim Mohammed, the Coordinator for EGP, speaking on the sidelines, noted that his outfit will take up the observations, suggestions, and issues raised at the forum to reach out to the government and possibly the IMF to make sure that the right path is taken to resolving Ghana’s economic predicament.

The forum, themed, "Ghana's Debt Exchange Program in Context: Is it a make-or-break for an IMF Bailout or there are viable alternatives?" was funded by OXFAM and attended by some astute economists and representatives from Civil Society Organizations (CSO).