By Francis Ntow
Accra, Feb 17, GNA – The Association of Ghana Industry (AGI) has expressed fears that financial institutions may not have enough liquidity to give them loans for their business operations.
The situation, they say, may lead to a slowdown of operations and increase unemployment.
The AGI’s concerns come as the Government secures about GHc83 billion from financial institutions and individual bondholders in its Domestic Debt Exchange Programme (DDEP), aimed at restoring market confidence and economic stability.
Mr Tsonam Cleanse Akpeloo, Greater Accra Regional Chairman, AGI, described the DDEP as a “necessary evil” for Ghana to secure the $3bn International Monetary Fund (IMF) loan-support programme.
However, Mr Akpeloo, who is also an Economist, feared that it would be difficult for industries to get access to funds, especially from banks, to support their operations as a result of the DDEP.
Speaking to the Ghana News Agency in an interview on Wednesday, Mr Akpeloo asked the Government to ensure that confidence in the financial sector was not eroded through the debt restructuring and the IMF programme.
“Our fear is that a lot of people may not be willing to save their money at the banks or pursue some of these government bonds. Because as it stands now, there’s little money in the system and when that happens, confidence in the financial sector will be eroded.
“The challenge would be that you will have few people sending money to the banks (who themselves use depositors’ and bondholders’ money), and they may not be in the position to give loans to industry. That will mean that our industry will begin to sink,” he said.
Mr Akpeloo noted that it had taken Ghana a long time to restore confidence in the financial sector, recalling past years when many people resorted to keeping their monies at home.
“For an exceptionally long time, people had to keep their money at their homes and it has taken a lot of work to build our financial system to this level. Our fear for this programme is that we may be going back to that situation where all the gains made in building confidence in the financial sector will be eroded.”
The Government, must therefore, make sure that even under the DDEP and the IMF programme, it safeguards confidence in the financial sector, he said.
Professor Godfred Alufar Bokpin, an Economist, institutions and individuals had sacrificed enough to enable the government to secure the GHc83bn under the DDEP to help in dealing with the economy difficulties.
He said the DDEP meant that “insurance companies have lost hugely, individuals, who sign up have also lost hugely, as such, the Government must also show much commitment in cutting down expenditure further.”
The Government in 2023 budget announced among other measures to cut down on government spending and boost revenue, the reduction of expenditure on appointees including salary freezes and suspension of housing, utilities and clothing allowances.
The measure also included a freeze on new tax waivers for foreign companies and a review of tax exemptions for the Free Zone, mining, oil and gas companies, as well as a hiring freeze for civil and public servants.
However, Prof Bokpin, said those measures were not enough, suggesting that considerations should also be made in reducing the size of the Government and the termination of Ex-gratia payments.
Dr Patrick Asuming, a Senior Lecturer at the University of Ghana Business School (UGBS), noted that the amount secured by the Government through the DDEP would provide some relief on finances.
“In terms of Government finances, it means that government gets some breathing space to be able to undertake some of its programmes and will enable the Government to get the IMF facility approved.”
Dr Asuming also urged the Government to be prudent with its expenditure, increase domestic revenue mobilisation efforts, and pay more attention to agriculture and the manufacturing sectors to change the structure of the economy.
GNA