The Ghana National Chamber of Commerce and Industry (GNCCI) has raised concerns over the impact of the Domestic Debt Exchange Programme (DDEP) on the private sector and wider economy.

Although the Ghana Financial Stability Fund is being set up for the financial sector with an extra layer of safeguarding for the banking sector through the central bank’s exclusive liquidity arrangements, the Chamber said attention is not given to the programme’s expected impact on the private sector.

GNCCI’s president, Clement Osei-Amoako, therefore expressed concern over impacts of the government debt operations, saying: “Nonetheless, the extent to which the private sector and wider economy will be impacted has not received the needed attention. Further, businesses must be informed of the impact and adapt appropriate business strategies”.

Despite acknowledging the DDEP’s importance to restoring macroeconomic stability, the Chamber said its analysis from the 2021 audited financial statement of 22 commercial banks reveal that over 50 percent of the total assets of six commercial banks are exposed to government bonds and Treasury bills.

Also, over 70 percent of six commercial banks’ total deposits are exposed to investment securities in government bonds and Treasury bills; and that overall, a minimum of two-thirds of total deposits are exposed to government bonds and Treasury bills across half the commercial banks.

Striking a delicate balance to mitigate inherent losses on the back of the DDEP, Mr. Osei-Amoako advocated calling for adjustments to fiscal and monetary policies that will be decisive going forward. “A successful implementation of the DDEP must take into account the specific and overall impact on the Ghanaian economy.”

“The state of Ghana’s economy has been a major concern for stakeholders. This demands that pragmatic steps are undertaken to achieve lasting solutions to these structural and cyclical issues: high inflation; rising interest rates; cedi depreciation; ballooning debt levels; and tightening policy rate, among others,” he added.

Debt operations

As of December 2022, the total outstanding debt (eligible and non-eligible holders) amounted to approximately GH¢137billion. Subsequent extensions of dates and payment of maturities meant that the remaining stock was reduced from GH¢137billion to GH¢130billion.

However, the eligible bonds as per the exchange memorandum meant an exclusion of pension funds and bonds that were subject to swap mechanisms for monetary and exchange rate policy operations. This then brought the eligible bonds for tendering to GH¢97.75billion. Out of the total eligible bonds for tendering, GH¢83billion was successfully tendered – accounting for about 85 percent of outstanding eligible amounts and meeting the target of 80 percent as expressed in the memorandum of exchange.

Nonetheless, the GH¢83billion bonds that were successfully tendered represent 64 percent of the outstanding debt stock of GH¢130billion at the end of December 2022.