The report that the Governor of the Bank of Ghana, Dr Ernest Addison, has expressed hope that the proposed debt exchange programme to restructure the country’s debt will bring some confidence into the economy as well as enhance the ongoing monetary policy to control inflation is one of the trending stories in the Ghanaian press on Tuesday.
‘The Ghanaian Times reports that the Governor of the Bank of Ghana, Dr Ernest Addison, has expressed hope that the proposed debt exchange programme to restructure the country’s debt will bring some confidence into the economy as well as enhance the ongoing monetary policy to control inflation.
According to him, this had become necessary due to the economic challenges, which many banks were being affected.
Speaking at the Annual Bankers Dinner in Accra on Saturday which is part of the Bankers Weeks celebration by the Chartered Institute of Bankers Ghana, Dr Addison said the proposed debt exchange programme by the government was an important move that would help strengthen the banking sector in the midst of the economic challenges.
“To guarantee debt sustainability over the medium term, a debt exchange operation is proposed to be undertaken to support the consolidation agenda. I think that the information provided should give us a broad level of confidence that the fiscal measures as well as the debt operations will help us foster confidence, improve our debt metrics and complement what we have been doing in the monetary policy to bring down pressures in the pricing levels,” he said.
The annual event forms part of a platform by bankers to engage and take stock of happenings in the industry for the year and forge ahead.
The Governor of the Central Bank according to myjoyonline.com, also said the banking sector lost some reserves as a result of some pressures on the local currency, hence the decision to introduce the domestic gold buying policy.
President of the Chartered Institute of Bankers, Benjamin Amenumey, expressed worry over the high cost of doing business by banks and hinted that members were adopting new measures to overcome the challenge.
He said the Chartered Institute of Bankers, Ghana would launch a book to capture happenings in the industry for the past 60 years since its establishment.
The newspaper says the government has announced that Treasury Bills holders will receive the full value of their investments upon maturity.
Consequently, all Treasury Bills are exempted from government debt exchange undertaken by government as part of measures to ensure restore macroeconomic stability.
Furthermore, there would be no haircut on the principal of bonds and individuals holding such bonds would not be affected.
Addressing journalists on the country’s domestic debt exchange programme, the Minister of Finance, Mr Ken Ofori-Atta said government had been working hard to minimise the impact of the domestic debt exchange on investors holding government bonds, particularly small investors, individuals, and other vulnerable groups.
“The Government recognises that our financial institutions hold a substantial proportion of these bonds. As such, the potential impact of this exchange on the financial sector has been assessed by their respective regulators. Working together, these regulators have put in place appropriate measures and safeguards to minimise the potential impact on the financial sector and to ensure that financial stability is preserved,” he said.
The Minister noted that the broad contours of the Debt Sustainability Analysis had been concluded and details on Ghana’s Domestic Debt Exchange would be launched today.
“External debt restructuring parameters will be presented in due course. Under the Programme, domestic bondholders will be asked to exchange their instruments for new ones,” he said.
Mr Ofori-Atta explained that, existing domestic bonds as of December 1, 2022 would 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 per cent in 2023, five per cent in 2024 and 10 per cent from 2025 until maturity. Coupon payments will be semi-annual.
Our commitment to Ghanaians and the investor community, in line with negotiations with the International Monetary Fund (IMF), is to restore macroeconomic stability in the shortest possible time and enable investors to realise the benefits of this Debt Exchange,” he said.
Mr Ofori-Atta indicated that the Bank of Ghana, the Securities and Exchange Commission, the National Insurance Commission, and the National Pensions Regulatory Authority would ensure that the impact of the debt operation on financial institutions was minimised, using all regulatory tools available to them.
“A Financial Stability Fund (FSF) is being established by Government with the help of development partners to provide liquidity support to banks, pension funds, insurance companies, fund managers, and collective investment schemes to ensure that they are able to meet their obligations to their clients as they fall due,” Mr Ofori-Atta, said.
The Graphic reports that the Trades Union Congress (TUC) says it was “gravely concerned about the government’s Domestic Debt Exchange (DDX) programme because of its potential negative impact on worker’s pensions.
“We are equally concerned about the lack of prior engagement with Labour given that substantial portion of worker’s pension is invested in government bonds,” a statement dated December 5, 2022, signed and issued by the Secretary of the TUC, Dr Yaw Baah said.
“We have taken special note of the statement by the Minister of Finance that the Debt Exchange Programme is voluntary.
“The TUC will scrupulously analyse the propriety or otherwise of the participation of pension funds of its members in the programme.”
“We are assuring workers, that the TUC and its Affiliate Unions will do everything in our power to ensure that our members are fully protected and that not even a pesewa of pension funds is lost in the Debt Restructuring Programme.”
“We are therefore, appealing to all workers and unions to remain calm as we work to protect our retirement funds.
The TUC’s reaction followed the government’s move to rely on a softer payment plan with institutions and individuals who have lent money to the country as part of efforts to reduce the burden the public debt stock puts on the economy.
The plan, which is in line with the government’s commitment to restore macroeconomic stability in the shortest possible time, involves the swapping of existing domestic bonds with longer-dated bonds that will take between four and 14 years to mature in 2037.
This means the extension of the repayment period for the bonds issued and held locally to allow for a staggered and phased payment of both the interest and the principal.
The newspaper says that United Bank for Africa (UBA) Ghana has organised a capacity building programme for its customers in the small and medium enterprise (SME) category.
It was aimed at equipping and enabling SMEs in the country with the requisite knowledge to grow into global brands and overcome business challenges.
On the theme, “Maximising SME business growth opportunities in Ghana” the workshop explored areas of collaboration and measures SMEs can put in place to sustain their businesses.
The Managing Director and Chief Executive Officer (CEO) of UBA Ghana, Chris Ofikulu, said the capacity building was in line with the bank’s focus on helping SMEs to increase their knowledge and run more efficient businesses to expand into new markets.
“UBA wants to see SMEs grow, one of our promises to our SME customers, among other things, is capacity building and advisory services. It is for this reason that we use various initiatives to engage them in ways we can support their businesses to grow.”
“The importance of SME in every economy cannot be over-emphasized and Ghana is no exception. You contribute immensely to the Real Sector growth of the economy and employment of Citizenry. UBA remains focused on delivering unique services to give your business great support,” he said.
The Chief Executive Officer of Naton Olives Consult, Owusu Achiaw Kwaakye, underlined that need for participants to scale up businesses through access to the new market.
The areas covered in his presentation were: What it means to scale a business, identifying and assessing market opportunities, leveraging social media to grow your business, and Smart credit hacks.
The President of the Ghana Union of Trade Associations (GUTA), Dr Joseph Obeng, urged SMEs to capitalise on business growth by effectively collaborating to increase resources, ideas, and knowledge.
The Managing Director of Unilever Ghana, George Owusu Ansah, said the current economic issues were having a huge impact on SMEs.
He said SMEs needed to be innovative and adopt keen steps that would make them sustainable.
GIK/APA