Professor of Finance and Economics at the University of Ghana Business, Godfred Bokpin, has warned that debt restructuring will occur again if individual bondholders and pensioners are forced to sign up for the Domestic Debt Exchange Programme.
According to him, the country is developing a governance system in which governments mismanage the economy and then resort to debt restructuring.
“Look, if we don’t correct that canker and coerce our own people, pensioners and the rest of them, we’ll go through this and, in less than three years, we might have to restructure our debts again,” he said on Joy Super Morning Show.
“How come we’re saying this? If the problem is primarily one of governance, then governance reforms must underpin structural and anchoring structural adjustment. As a result, whatever gains we make under the IMF program will be long-term. “We must not allow this to happen,” he said.
If all other factors remain constant, the Domestic Debt Exchange Programme will expire today, February 7, 2023.
However, the government has urged individual bondholders who have yet to join the program to do so.
“I do not believe that individual bondholders should purchase the bond.
I recognize that some level of debt restructuring is unavoidable. However, we are not at the point where we can ask individual bondholders to come to the table because the fiscal side of the problem has not performed even on average. Once the fiscal side has failed to meet its obligations, there is no reason to shift the burden to individual or institutional bondholders.
Furthermore, Professor Bokpin stated, “we should not allow that to happen. You know what we’re doing; if we’re not careful, we’re creating an incentive for a political elite to govern, borrow, and use it anyway.”
“And they know they can give us the haircut.
