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Banks have over GH₵‎60bn locked up in bonds

Debt Exchange Programme will be their death warrant

The National Democratic Congress (NDC) Parliamentary Minority Caucus says Debt Exchange Programme will negatively impact financial institutions and all Ghanaians in general.

With over GH₵‎60 billion locked up in government bonds, the minority said the non-receipt of any interest this year and paltry sums in subsequent years will prove the undoing of some banks.

Addressing the media in parliament, Minority Leader and Member of Parliament for Tamale South  Mr Haruna Iddrisu, said in the case of some state-owned banks,  as much as 70% of their annual revenue comes from their investments in government bonds.

Consequently, he said not paying them any interest in 2023 would effectively sound the death knell to banks with its attendant consequences on depositors and employees who would have to be laid off.

According to him, restructuring domestic debts would undermine the health of the banking system since Capital Adequacy will become a challenge

Iddrisu warned that the Programme would further exacerbate the already perilous financial sector as banks and other financial institutions were still reeling under the infamous financial sector bailout.

He said the last thing Ghanaians would want is a total collapse of the financial sector due to the government’s excessive borrowing.

Mr Iddrisu said the future sustainability of nation’s insurance companies could not be guaranteed under the current crafting of the Debt Exchange Programme.

“Indeed, the Programme, as proposed and implemented now cannot be in the interest of our financial institutions and insurance companies. It certainly is not in the best interest of Ghanaians. Reserves of Insurance companies will fall with implications for benefit payments.”

Effects on Pension funds

The Minority leader noted that pension funds will suffer a significant drop in value especially, saying Tier 2 and 3 pension payouts will drop further from their already low levels.

He projected that Tier 1 Social Security and National Insurance Trust (SSNIT) reserves will drop in value and SSNIT’s capacity to pay will suffer.

Effects on individual bondholders

Mr Iddrisu said the inclusion of individual bondholders in the Domestic Debt Exchange, contrary to initial assurances from both the President and his finance minister, would all but wipe out Ghana’s middle class and impose harsh suffering on them, their families, and dependents.

He announced that Ghanaian individuals have started receiving text messages from their banks as affected individual bold holders and dependents numbering about 1.3 million petitioned Parliament for a reversal of Debt Exchange Programme.

“It is inconceivable to accept that individual bonds will be affected,” he said.

He described the inclusion of individual bondholders in the DDE is the biggest transfer of funds from the pockets of Ghanaians to the  government and will leave affected persons, mainly the middle  class, impoverished while worsening the plight of the poor.

This must immediately be stopped, he stated

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