Although the government may have been able to reduce its domestic debt burden by $12 billion through the Domestic Debt Exchange Program (DDEP), there is a severe human and financial cost associated with this savings.
Government has touted the Domestic Debt Exchange Programme as highly successful achieving over 90% participation rate leading to the $12 billion in savings.
But the Dean of the University of Cape Coast Business School, Prof. John Gatsi says the $12 billion joy of the government is the tears of vulnerable groups like pensioners who have received haircuts on their life savings.
For the many affected Ghanaians, the savings of the government has resulted in a sharp decline in their fixed incomes, making it harder for them to afford essentials such as medicine and healthcare.
Prof Gatsi says the savings represent “the difficulty to buy medicines by pensioners occasioned by the haircut.”
What is more worrying, according to the economist, is the continuous trumpeting of these savings to bruise the wounds of the affected creditors.
Prof. Gatsi says this act of government is a clear indication that it lacks empathy for the people who have made sacrifices for the state at the expense of their lives and livelihoods. He says it is “painful not showing empathy to citizens but talking about savings that is only bruising the wounds of legitimate investment.”
For banks, Prof. Gatsi indicates that the purported savings in relation to the DDEP will significantly impact their balance sheets. He says the so-called savings could now be observed as mounting losses on the books of the Bank of Ghana and commercial banks alike. The strain has contributed to a fragile credit environment, where lending to small and medium enterprises (SMEs) has been curtailed, ultimately stifling economic growth and job creation.
The Dean of UCC Business School says the $12 billion also represents “the money government will no more pay but can be seen in the losses on the books of BoG. It is what is no more on the debt records of Ghana but seen in huge NPL of the banking sector and higher treasury bill rate and fragile credit to SMEs.”
The DDEP may have lightened the government’s immediate debt burden but Prof. Gatsi believes it came at a huge cost and at the expense of the very people it is meant to protect.
