Economist Punches Holes In Government’s 85% Participation In Debt Exchange Program

Economist Punches Holes In Government’s 85% Participation In Debt Exchange Program

Political Risks Analyst and Economist, Dr. Theo Acheampong has raised doubt over the announcement that government has achieved 85% participation in the controversial Domestic Debt Exchange Program (DDEP).

The doubts come barely a day after government released a statement announcing that it has achieved an approximated participation rate of 85% which translates into about GHC 83 billion from a possible GHC 98 billion worth of bonds.

This means that at the close of the deadline, GHC 83 billion worth of bonds have been exchanged for news ones from a possible GHC 98 billion.

But commenting on the announcement by government, Dr. Theo Acheampong raised concerns on how government arrived at the GHC98 billion since from at the beginning of the program, it was announced that government is looking forward to exchange about GHC 137 billion worth of bonds for news ones.

In addition, he added that using the initial figure of GHC 137 billion, the actual amount exchanged translates into 61% and not the over 80% claimed by government.

Although Dr. Acheampong recognizes some of the exemptions made by government as reported in the Ministry of Finance’s press statement yesterday, he raised questions about the impacts of such exemptions.

Describing the calculation of government as “funny accounting gimmick”, the economist stressed that the portion of the exempted bonds which are the bonds converted to treasury bills by holders following the announcement of DDEP will pose serious threat for government.

To him, the conversion of the long-term instrument to short-term instruments means government will face bigger short-term payment obligations since these instruments have bigger interest rates.

In a Facebook post, the economist explained that, “folks, there’s a funny accounting gimmick being deployed by the government to make it look like it got 85% participation in the domestic debt exchange programme (DDEP) when in fact, if the initial DDEP amount of GHS137 billion is considered, the actual exchange amounts to 61%, as many observers highlighted from the get-go! In paragraph 5 of the press release, the govt has decided to deduct (a) amounts of Eligible Bonds held by persons that are not Eligible Holders and that were not eligible to participate in the Exchange; and (b) amounts held by persons that following the announcement of the Exchange converted their Eligible Bonds to treasury bills.

Dr. Theo Acheampong added that, “basically, the conversion to T-bills means that the govt has an even bigger short-term payment obligation as these instruments have bigger interest rates (coupons) than many of the eligible bonds”

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