By Eugene Davis
Parliament’s Ranking on Finance, Dr. Ato Forson has disclosed that about five banks are likely to go bust following government’s impending domestic debt exchange programme(DDE) if the latter fails to engage further.
Speaking to journalists during a minority press conference on DDE on Monday at parliament house, he cautioned government to engage extensively or things could get to its head.
“If they fail to engage, they will continue to postpone, the banks have 60bn plus in government bonds, the insurance companies have 10bn plus of their monies in government bonds, the two put together is 70bn, on average they would be earning 20percent coupon for the year 2023, this 20percent coupon of 70bn translate to about GHc14bn they will lose in the year 2023.
If you put their profitability for the year 2023 together, they would not even get 50percent of this as profit, so what will happen, the banks will collapse, in fact I project a minimum of five banks collapsing if this goes ahead, not only that a number of banks would have to close branches and lay off staff, the monies that the banks have invested, it is not their money – it is depositors money, so there will be liquidity issues, when you go the bank that you are going to take your money, there is a possibility you won’t get your money.”
According to Dr.Forson, 13.1bn of individuals money that is expected to go their pockets government wants to take it, so the reason they need to engage, until they engage the country will crash.
Suspend Domestic Debt Exchange
Minority Leader, Haruna Iddrisu addressing the same press conference in Parliament to state the position of the minority on government’s 16th January deadline for bondholders to sign onto the debt exchange programme or face dire consequences, cautioned the government, particularly President Akufo-Addo to stem any forcible implementation of the proposed debt exchange programme and rather consult exhaustively on the way forward.
He says the same government that borrowed the country into the financial ditch, cannot arrogantly ignore the concerns of bondholders and proceed to implement its widely opposed debt exchange programme.
“How did we get to this pit? Simple. Reckless borrowing! Sadly, the NPP Government led by Nana Akufo-Addo-Bawumia has not learned any lesson. The NPP was not only reckless in borrowing, but it has been reckless in announcing and implementing the Debt Exchange Programme. It is clear that the NPP Government did not properly think through this whole idea of a debt exchange programme. This has led to manifest confusion in the implementation of the ongoing debt exchange programme.”
Further, the minority called for ““immediately suspend the Domestic Debt Exchange Programme and engage in more comprehensive consultation on the matter with all stakeholders and the Ghanaian people.”
“It is called on all stakeholders for a national dialogue on the state of the economy and debt exchange programme with the view to achieving the most workable and least punitive steps that protect Ghanaians and households from the disastrous effects of the Domestic Exchange Program as currently received.”