Haircuts or not: Be proactive in clarifying issues – UGBS Economist tells govt

Finance Minister, Ken Ofori Atta

An Economist at the University of Ghana Business School (UGBS) Dr Patrick Assuming has told the government to be proactive in providing clarification on policies and programmes that seem to confuse the people.

He said the government must not allow rumours to thrive and get consumed before providing clarity.

Dr Assuming believed that the clarification by the Finance Minister Ken Ofori-Atta, President Nana Addo Dankwa Akufo-Addo and other government officials that there will be no haircuts came late.

“They should come out quickly to put the right information out there rather than allowing rumour to thrive,” he said on the New Days how on TV3 Monday December 5 while commenting on the launch of the Debt Exchange programme by the Finance Minister Ken Ofori-Atta.

He added “As soon as people hear these tings they begin believe it… If you say people won’t lose money without clarifying, all of that give people potential to have misconception.

“The government should come out and be clear.”

The Finance Minister Ken Ofori-Atta said during the launch of the debt exchange programme that was introduced by the government in the 2023 budget that it will help in restoring the Ghanaian economy back on the right direction in order to create jobs and protect income of the people, Finance Minister Ken Ofori-Atta has said.

He said the government expects an overwhelming support for the programme after assuring that there will be no haircut on the principal of your domestic bonds.

He said after citing best practices in countries such as Greece, that the debt exchange programme “is an orderly way to put our economy back on track in order to create jobs, protect income and restore hope to the Ghanaian people.”

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“The govt expects overwhelming support for this exchange programme,” he stressed.

He further dismissed speculations that there is going to be haircuts following the programme.

“There will be no haircuts,” he said.

He further justified the introduction of the debt exchange programme.

He stated that it has become necessary because of the enormous challenges with debt servicing.

He revealed that debt servicing is consuming “almost of government’s revenue and also 70 per cent of tax revenue.”

“Which is why we are announcing this to restore our capacity to service debt,” he stressed.

Under the debt exchange programme, he said, ” domestic bond holders will be asked to exchange their instruments for new ones.”

He added “Existing domestic bonds as of 1st December will be exchanged for a set of four new bonds maturing in 2027, 2029, and 2037.”

The annual coupons on all of these bonds will be set at 0 % in 2023, 5% in 2024 and 10% from 2025 until maturity.

“Coupon payments will be semi annual ‘ he stressed.


By Laud Nartey||Ghana