Ranking Member of Parliament’s Finance Committee Dr. Cassiel Ato Forson has said the banking sector is going to face huge crisis due to government’s debt exchange policy.
This comes after Government’s debt restructuring policy was announced on Monday by Finance Minister Ken Ofori-Atta.
The debt exchange programme is likely to have adverse effects on bonds, with talks of 30% haircuts causing fear and panic within the local investor community.
Ato Forson, a former Deputy Finance Minister, said the wanton borrowing by the government from local banks and failure to service the debts could collapse some banks in the country.
Dr. Ato Forson who was speaking to Kwame Minkah on Dwaboase on TV XYZ indicated that since the banks are the holders of these bond whose funds the government have borrowed and cannot pay could cause job losses in the financial sector.
He strongly believes the debt restructuring policy will adversely affect not only banks but their customers as well as haircuts keep soaring.
“I want us to understand that the bank’s work is to convince people to save or invest with them, then they use these monies to buy bonds and it is the interest generated from these bonds that the banks use to pay their staff as well as pay interests to their clients so if the government fails to pay the banks, operations of these institutions will suffer and can lead to their collapse,” he said.
“I know that 50% of their revenues come from government bonds and other banks whose receivables used to run the bank come from government bonds,” he stated.
The MP for Ejumako Enyan Essiam, therefore, argued that the policy is going to reduce the strength of the bamks and even lead to the laying off of bank staff.
“If the banks struggle and can’t pay their staff, there’ll be layoffs,” he said in Akan.
He again noted that this effect will also be felt by the individuals who have their monies in the local banks as they may either not receive their interests or principal amount.
He further expressed his disappointment in the government for rolling out such a programme without consulting major stakeholders who will be affected.
“This is why we are telling the government that this is not a good initiative, the loans belong to Ghanaians and not Akufo-Addo so you must consult key stakeholders of the economy if you have to take decisions like this,” he pointed out.
He also kicked against the government touching pension funds in the ongoing debt restructuring programme.
Meanwhile, the Trades Union Congress (TUC) has kicked against the government’s ongoing debt exchange programme as the economy keeps failing.
While the Minority in Parliament vowed to use all legal means to stop the programme, the TUC believes the development will bring hardship on its members because they are likely to lose part of their investments.
Speaking on Inside Politics on Power 97.9FM Monday, the Deputy Secretary General of TUC, Joshua Ansah, sent out a warning to government not to touch pension funds in its planned debt exchange programme.
“We are really disappointed in the government for treating TUC and organised labour like an afterthought,” he said as he warned the government not to tamper with their future livelihood.
“Pension is something that is meant for our future, and if government wants to have a debt restructuring, they dare not touch our pensions. They can’t kill our future,” he warned.