Skip to main content

TUTAG rejects government debt restructuring programme


 The Technical University Teachers Association of Ghana (TUGAG) has added its voice to calls for the government to reconsider the newly announced Domestic Debt Exchange programme to allow for greater engagement before it is rolled out.

It said it rejects the current shape and form of the programme as it will further worsen the already precarious economic conditions of Ghanaians.

Statement

A statement issued and jointly signed by its president and secretary Surv. Prof. Dr.-Ing. Collins Ameyaw, Abubakari Zakari (PhD), said the financial distress which, necessitated the restructuring of the government’s debt implies a greater risk and, therefore, a higher return should have been proposed.

Interest disparity

The slashing of interest rates by the government defies investment logic. The 0% coupon rate in 2023 implies that real interest rates on these bonds in 2023 will be negative," the statement said.

"Importantly, the principal also devalues by the inflation rate in 2023. The claim that the principal is intact is, therefore, untenable".

The six-point statement said Ghana's inflation records, at least over the past decade, has always exceeded five per cent.

So to promise five per cent coupon rate in 2024 means the real interest rate is also negative and the principal will also take a cut.

"In particular, 2024 is an election year and election years have been very inflationary in the past," it said.

The statement said given that Ghana has missed its inflation targets more than it has achieved them since 2007 when inflation targeting started, the offer of 10 per cent coupon rate in 2025 and beyond is equally untenable.

Invariably it said, real returns would be negative many times more than they will be positive.

The statement said indeed, in the best scenarios when real returns will even be positive, they will not exceed four per cent.

However, the statement indicated that in the worse case scenarios, the negative real returns and the erosion of principal could be significant.

Pensions

It expressed concern with retirement contributions of members invested in government bonds and pension benefits which it maintained will be substantially impaired if the government implements this proposal.

The subtle coercion of investors into the proposed arrangement, clothed as 'voluntary participation' is unacceptable.

The statement, therefore, urged the government to exhaustively engage the various stakeholders in order not to erode confidence in the domestic financial system.

It said the external financial market is shut to the country and this is not the time to kill the local financial market which is the only hope for the government.

Read the entire statement below;

 
  •  
Labels:

Comments

Post a Comment

Popular posts from this blog

Fitch Solutions retains 2025 growth rate projection at 4.2%

 Fitch Solutions has reaffirmed its projection that Ghana’s economy will expand by 4.2% in 2025. This estimate slightly exceeds the International Monetary Fund’s forecast of 4% and the World Bank’s projection of 3.9%. The UK-based research firm attributes its outlook to historically high gold prices, which are expected to cushion the Ghanaian economy against a global slowdown triggered by rising tariffs. Higher gold prices are anticipated to strengthen government revenue, enhance foreign exchange earnings, and help sustain currency stability. The report also highlights that Ghana is relatively less vulnerable to increasing trade restrictions from the United States, given that its primary exports—gold and crude oil—are not directly affected by the tariffs introduced by President Trump’s administration. Moreover, the US constitutes only about 4% to 5% of Ghana’s total exports. In contrast, Ghana’s trade relations are more heavily oriented toward China and European countries, particul...
Post a Comment
Read more

BoG injects $20m into FX market to support 11 BDCs

  The Bank of Ghana (BoG) has injected $20 million into the foreign exchange market in the latest round of its forward FX auction targeted at Bulk Oil Distribution Companies (BDCs). The intervention, which benefited eleven BDCs, is part of the central bank’s broader strategy to stabilise the cedi and ensure price stability in the petroleum downstream sector. Held on Tuesday, April 29, the auction was priced at a locked exchange rate of GHS 14.28 to the US dollar, with bid offers ranging from GHS 13.85 to GHS 15.55. This move reflects the BoG’s continued effort to deepen forex liquidity and safeguard the domestic fuel supply chain against volatility in global energy markets. By directly supplying FX to BDCs, the central bank seeks to ease pressure on the interbank market, guarantee the uninterrupted flow of petroleum products, and mitigate the pass-through effects of exchange rate fluctuations on fuel prices. The $20 million disbursement forms part of a $120 million programme for th...
Post a Comment
Read more

Kenpong Travel & Tours Champions Breast Cancer Awareness During Customer Week

  As part of activities to mark Customer Week, Kenpong Travel & Tours, a leading travel agency in Ghana, is joining the global fight against breast cancer. October is Breast Cancer Awareness Month, and the company is passionate about spreading hope and support to those affected. At Kenpong Travel & Tours, we believe that travel and exploration can be therapeutic and empowering. That's why we're committed to supporting our customers and the broader community in the fight against breast cancer. We're proud to stand in solidarity with breast cancer warriors and survivors. At Kenpong Travel & Tours, we believe that everyone deserves a chance to explore the world and create unforgettable memories. Let's prioritize health, support one another, and fight against breast cancer," said Kennedy Agyapong, CEO of Kenpong Travel & Tours. Our efforts are focused on raising awareness, promoting early detection, and supporting those affected by breast cancer. We urg...
Post a Comment
Read more