Abolish Moratorium To Save Individual Bondholders -IEA

Dr. John Kwakye


THE INSTITUTE of Economic Affairs (IEA) has insisted on the abolishment of the three-year moratorium repayment of the principal for the Domestic Debt Exchange Programme asking the government to adopt a new coupon of between 8 and 12 per cent over the new maturity period.

Director of Research at the IEA, Dr. John Kwakye, at a news conference on Tuesday, said there was the need for government to adopt a new coupon regime of 8 to 12 percent over the new maturity period and also consider abolishing the 3-year moratorium on the repayment of principal to save individuals and banks”

He called on government to cut expenditure on flagship programmes in the midst of the Domestic Debt Exchange programme aimed at achieving debt sustainability.

According to him, government flagship programmes such as the Free SHS accounted for a chunk of government expenditure which could be reduced to save the country over GH¢2 billion annually.

He said “Numerous Government flagship programmes account for a chunk of Government expenditure. Figures provided for 2023, indicate a budget of GH¢9.2 billion for the flagship programmes. Calls for a comprehensive review of the programmes with the view to rationalising them and reducing costs have virtually gone unheeded.”

He, therefore, called for reforms to reduce the budget allocations to include targeting the policy to the poor and lower middle-income people.

He further said it was not prudent for government to target rural banks on the Debt Exchange Programme since most of the people who saved with them were individuals who were financially vulnerable and therefore should not be made to bear the brunt of fiscal mismanagement of government.

He also suggested conditions such as safeguarding the stability and integrity of the financial system, designing the programme to prevent capital flight and increase in cost of borrowing, engaging with stakeholders in its design and implementation including comprehensive fiscal reform strategy and  structural reforms, among others, to be included for a successful debt exchange programme.


By Ebenezer K. Amponsah