Invest savings from DDEP into productive sectors — ISSER
The Institute for Statistical, Social and Economic Research (ISSER) wants government to channel savings expected to accrue from the implementation of the Domestic Debt Exchange Programme (DDEP) into productive sectors of the economy.
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The research institute of the University of Ghana (UG) strongly held the view that increased investments into agriculture, industry and services for instance would ensure a quick rebound of the economy.
The Director of ISSER, Professor Peter Quartey, made the suggestion at the Chamber National Dialogue Series in Accra on February 21.
He indicated that the government should inject all the necessary seriousness and determination to secure an International Monetary Fund (IMF) deal within the shortest possible time.
“There will be savings from the interest that we will no longer be paying through the debt exchange programme and so, we should invest in productive sectors of the economy.
With increased investment in the productive sectors, I am very confident that we will turn the economy around as quickly as possible,” he said.
The dialogue series
On the theme, "Impact of the Domestic Debt Exchange Programme on the Private Sector of Ghana," the dialogue series, which is an initiative of the Ghana National Chamber of Commerce and Industry (GNCCI), is an advocacy platform that features selected topics aimed at influencing government policies in favour of businesses.
The maiden edition brought industry experts, academics, policy makers as well as captains of business to deliberate on the impact of the domestic debt exchange programme (DDEP) on the private sector.
It was also expected to explore the necessary business strategies and policy adjustments to mitigate losses.
Slow growth
Prof. Quartey noted that the country’s economy was expected to experience slow growth in 2023 but expected to pick up in 2024 with an IMF programme.
"If we are able to sign up to the IMF programme, we can restore macro stability. I am hopeful that if we restore macro stability, we will achieve fiscal consolidation and cut out waste to show the world that indeed, we are in a crisis but we are willing to come out as quickly as possible,” he said.
Aggressive fiscal reform
The Convener of the Ghana Individual Bondholders Forum, Senyo Hosi, observed that the government needed to undertake an aggressive fiscal reform after the negotiation of the debt exchange programme.
He observed that even though the government has not been able to achieve its intended target, it has so far made appreciable progress for the programme.
“I must commend the government for the progress made with the programme because it has been able to relieve itself from servicing debt with about GH¢24 billion and GH¢10 billion on interest payments for this year.”
“And this has created the needed fiscal space for the government,” he said.
Withstand losses
For his part, a banking consultant, Dr Richmond Akwasi Atuahene, said the banking sector’s ability to withstand losses was still low due to the effects of the debt exchange initiative.
This, he said, was in spite of the establishment of the Ghana Financial Stability Support Fund with a capitalisation of GH¢15 billion to address potential liquidity challenges for banks that have agreed to the programme.
“The capacity of the banking sector to absorb losses is lower, not where it is well-capitalised to absorb estimated losses from the debt exchange programme,” he said.
Restoring stability
The President of the chamber, Clement Osei-Amoako, underlined the importance of the DDEP to restore macroeconomic stability and protect the most vulnerable in society.
He said nonetheless, the extent to which the private sector and the wider economy would be impacted has not received the needed attention.
Consequently, he stated that businesses must be informed of the impact and adapt appropriate business strategies.
“The GNCCI remains committed to promoting and protecting commercial and industrial interests in the country and working with government and other stakeholders to improve the business environment,” he said.
