Domestic Debt Exchange Programme: Tech Committee proposes ways govt can save GH¢83.5bn …Govt, insurers strike deal
A technical committee set by the government to address the concerns of Individual Bondholders Forum (IBF) has made over 20 proposals comprising expenditure cuts and revenue generation measures that could yield net savings of GH¢83.5 billion.
The government, through the Finance Ministry, set up a technical committee to address concerns raised by the Individual Bondholders Forum on the Domestic Debt Exchange Programme.
The technical committee comprised of the Director of Treasury and Debt Management Division, Samuel Arkhursand, and Director of Economics of Strategy and Research Division of the Ministry of Finance, Dr Alhassan Iddrisu, both representing the government.
Also, Conveners; Senyo Hosi, David Tetteh and Martin Kpebu represented the Individual Bondholders Forum and Dr Adu Anane Antwi, Convenor of Pensioners Bondholders Forum, represented his group.
A report issued by the Committee in Accra on Thursday proposed to the government to lend the $900mn Ghana Heritage Funds to the Bank of Ghana (BoG) to shore up the reserves.
It also recommended the restructuring of the fiscal council to include a creditors’ committee made of representatives from all investor classes in local bonds and empower the council to be an enforcing and binding institution and not just an advisory body.
The Committee requestedthe government to cut the budget provision for the energy sector shortfall of GH¢23 billion by GH¢3 billion through the reduction of transmission losses, technical losses, and administrative inefficiencies.
It also proposed a cap of the subsidies on premix fuel at GH¢200 million, thereby reducing the budget by GH¢150 million.
Owing to the excessive abuse of the subsidy, it suggested discount coupons to registered fisher folks for the purchase of premix.
The Committee also want the 2022 capital expenditure level maintained by reducing the non-Annual Budget Funding Amount (ABFA) of Ministries, Departments and Agencies (MDA) as well as foreign finance Capex provisions by 50 per cent to save GH¢10.7 billion.
Per the report, apart from the District Assemblies Common Fund (DACF), National Health Fund (NHF) and Ghana Education Trust Fund (GETFund), the transfers to all other statutory funds should be reduced significantly from the 15 per cent of tax revenues approved in the 2023 budget to 10 per cent.
It proposed special focus on Ghana National Petroleum Corporation (GNPC), Ghana EXIM Bank and Minerals Income Investment Fund (MIIF) to save GH¢7 billion.
The Committee called for drastic reduction in the number of MDAs, Ministers, and staff at the Office of Government Machinery to save GH¢6.5 billion.
It proposed a review of the Free SHS to make it more efficient through effective targeting and allowing parents who can pay to do so to save GH¢1 billion
Beneficiaries should be students that patronise Senior High Schools in their communities while other students pay for boarding.
However, the government can pay for students who do not have Senior Secondary schools in their communities.
The IBF holds the position that the proposals are competent enough to urgently address the fiscal challenges and enable Ghana to reach the desired 55 per cent debt-to-Gross Domestic Product (GDP) ratio target proposed to the International Monetary Fund (IMF).
In a related development, the government and the Ghana Insurers Association (GIA) have made headway on the terms of the Domestic Debt Exchange Programme for insurance companies.
This was announced in a joint statement by the Ministry of Finance and the Association issued on Thursday, January 26, 2023.
“The insurance companies will participate in the exchange on similar terms as the banks,” the release mentioned.
In addition, the government through the solvency window of the Ghana Financial Stability Fund will provide support for the insurance companies that will be heavily affected by the exchange programme.
This is to protect jobs and ensure stability in the insurance industry.
“The GIA is happy to reach a deal with the government that protects its members but also enables the government to push through the necessary economic reforms at these difficult times”.
