Business, Opinions

DEBT RESTRUCTURING DONE PURELY ON POLITICAL CONSIDERATIONS AND NOT ECONOMIC CONSIDERATIONS


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Mensah Thompson of ASEPA writes…

  1. Folks yesterday the Finance Minister announced the official debt restructuring program for our domestic bonds, I have since not seen any critical observation from the opposition in terms of the debt operation structure announced yesterday but I hear the Minority is set to address the Press today.
  2. I can only expect that the Minority would be able to ask the Finance Minister some key critical questions.
  3. First of all, Ken Ofori-Attah wants to do zero percent (0%) interest payments in 2023, 5% in 2024, then front load the rest into four new maturities;
  4. 2027 – 17%
  5. 2029-17%
  6. 2032-25%
  7. 2037- 41%
  8. Now the critical questions we need to ask Ken Ofori-Atta is what informed this new maturity dates?
    According to international best practices when you default on your debt and you want to extend your maturity, you set the new maturities to coincide with new revenue inflows.
    You cannot get up and say I want to pay my debt in 2027 but on paper you have no real investment anywhere that matures in 2027 that you can liquidate to offset that liability or have any hope of any inflow from anywhere accruing in 2027.
    So the question we are asking Ken Ofori-Attah, is that what inflow is he expecting in 2027, 2029, 2032 and 2045 for that reason he has pegged our various maturities at those years?
  9. The answer to the question above is nothing, there’s no expected in flow coming from anywhere in those new debt operations date set by Government, the dates have been handpicked purely on Political Considerations.
  10. You see Ken Ofori Attah after accruing unprecedented debt, wants someone else to come and clean his mess, he Ken Ofori-Attah who accumulated over 85% of the current debts that are being restructured and investors being asked to swap their old bonds for new ones, wants to pay only 5% of the debt.
  11. If you analyze the debt operation structure very well, he wants to pay 0% in 2023 and 5% in 2024, now in 2027 where would Ken Ofori-Attah be?
    No where!!
  12. So a new Government takes over in 2025, even if he is able to contain the dire economic situation by 2 years into the administration(in 2027) the new Government would be hit by a tornado of 17% of the current debt maturing, this would throw the new government and its program overboard as we go into the 2028 elections and I don’t have to over-emphasize the political consequences if the new government is not able to handle the situation well.
  13. Even if the new government is able to surmount the situation and win the 2028 elections, the following year 2029, immediately after transition, the new government would be hit by another maturing debt of 17%, this can collapse any government.
  14. As the new government is struggling to deal with this debt overhang of 34% of our current domestic bond maturing in less than two years, by 2032 the next election year, 25% of the debt would also mature.
  15. What Ken Ofori Attah announced yesterday was not a debt operation plan but purely a debt trap set for his political opponents, to one come and deal with the mess he has created but most importantly suffer the wrath of the people if they are not able to deal with it properly and suffer the political consequences that could propel the NPP back to power after 8 years.
  16. I expect that the Minority in Parliament reject this debt operation plan outrightly unless Ken Ofori Attah is able to demonstrate any real cash flow plan that coincides with the new debt operation dates announced yesterday, if the Minority fails to do so, what it means literally is that they have accepted to deal with Ken Ofori-Attah’s mess and so when it starts biting them in 2027, they should not come back to Ghanaians because they won’t have our sympathies!!!

Mensah Thompson
Executive Director, ASEPA

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