“No haircut” good for financial market… public reacts to president’s address to nation

An Economist, Dr Priscilla Twumasi Baffour, has described as ‘welcome news’ the announcement by the President, Nana Addo Dankwa Akufo-Addo, that there will be ‘no haircuts’ on investments as part of the International Monetary Fund IMF) programme.

She said the announcement was good and it would ease the fears of investors and bring confidence to the market and the economy.

Dr Baffour who shared her thoughts on the President’s address on the economy on Joy News on Sunday and monitored by the Ghanaian Times, said the announcement would calm the market.

The government is pursuing a debt restructuring strategy as part of the negotiations with the IMF for balance of payment support, and there are speculations by a section of the public that government would embark on ‘haircuts’ to ensure debt sustainability, but the President assured investors that there would be no ‘haircuts’ and as the government protected depositors funds in the banking sector clean up, so would it continue to protect investors.

“There will be no “haircuts,” so I urge all of you to ignore the false rumours, just as, in the banking sector clean-up, government ensured that the 4.6 million depositors affected by the exercise did not lose their deposits,” President Akufo-Addo said.

Dr Baffour said investors were on the edge and discounting their bonds because they were scared of losing their investments.

“The announcement is good and will be good for the stability of the financial market,” she said.

The Economist said when people lose credibility in the economy they withdraw their investment from the financial sector.

Dr Baffour explained that in a debt restructuring situation, a number of options could be adopted.

First, she said there could be postponement of the servicing of debt and also negotiation on the payment on interest that one had on the debt.

“There could be negotiation for delayed payment of the debt to reduce the debt burden on government,” she said.

Joseph Pad, the Public Relations Officer of Ghana Union of Traders Association (GUTA), said high interest rate was a challenge to businesses in the country.

According to him, businesses in the country could not compete with their counterparts in other countries.

“Until interest come down, a lot of people will not move into manufacturing,” he said.

He said businesses elsewhere borrowed at three per cent, While Ghanaian businesses borrowed at more than 30 per cent.

Samuel Amoah, of ‘GPRTU, for his part said the 19 per cent increment in transport fares was not enough because fuel prices had been increased again.

Professor John Gatsi, Dean of Business School of the University of Cape Coast, in an interview with the Ghanaian Times in Accra yesterday via telephone said it was good for the President to address the nation in times of crisis.

However, he said, the message the President gave was not encouraging and would not bring confidence to the market and the Ghanaian economy.

According to Prof. Gatsi some of the statements were backed or based on statistics and also not “grounded in facts.”

On issues of debts structuring, the Dean of the Business School of University of Cape Coast, said the President was not clear on the matter and his statements had left doubts in the minds of investors.

He said the President Akufo-Addo talked about Treasury Bills and Pension Funds and did not touch on bonds, saying “this is not a healthy development and will create room for speculations.”

On the issues of fiscal policy, Prof. Gatsi said there were no facts to back the statement by the President that fiscal deficit would be reduced to 55 per cent by 2028.

Rather, the Dean of School of Business of University of Cape Coast said the President should have outlined what would be done to achieve that target by 2028.

Professor Gatsi, however, commended the President for “choosing some items to incentivise local production.”

Mr Seth Twum Akwaboah, Chief Executive Officer of the Association of Ghana Industries (AGI), said his outfit welcomed the address by the President, adding that, although delayed, it would calm tempers and speculations especially in the foreign exchange market.

“People who have nothing to do with dollars have resorted to the buying of the currency in a bid to make money. These are all speculations fuelling the depreciation of the local currency. The president’s address will restore confidence,” he stated.

He said the AGI was particularly excited about the indication by the president to review the import of some products into the country.

“The next level should be further engagement with industry to agree on the products to be targeted,” Mr Akwaboah added.    

BY KINGSLEY ASARE                                       

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