Financial Sector confidence could be eroded if Domestic Debt Exchange Programme is not handled well – Ofosu-Dorte

The Executive Chairman of Law firm, AB & David, David Ofosu-Dorte has warned that confidence in the Finance and Banking sector could be eroded if the Domestic Debt Exchange Programme is not handled well by government.

Mr. Ofosu-Dorte expressed worry that the Debt Exchange Programme in its current form will dampen the appetite of investors seeking to re-enter the financial sector after a successful clean up exercise.

Speaking in an interview on January 12, 2023 with host, George Wiafe, Mr. Ofosu-Dorte said the programme could diminish investment in the country..

“Under the PNDC regime, if you had more than ₵‎50, you had a problem, and that resulted in some confidence issues, a move that ended up with some people keeping their money at home”.

Mr. Ofosu-Dorte, who is also a Business Strategist said “After 20 years, that confidence was restored. We had the banking sector cleanup which impacted on the system badly and when things were just improving, we now have to deal with this Domestic Debt Exchange Programme”.

Domestic Debt Exchange Programme

The Finance Ministry in December 2022, announced a Domestic Debt Exchange Programme as part of efforts to help Government improve the Debt to Sustainable Levels by 2028.

However, the programme was on two occasions extended, following concerns expressed by some of the stakeholders.  Government is now looking at January 16, as the new date.

Mr. Ofosu-Dorte advised that government should be tactical over how it goes about implementing the programme.

“The last time I check not a lot  of  individual bondholders have signed up for the Domestic Debt Exchange Programme , which can described as a sign of protest”  which is showing some sign of protest” , he stressed.

Legal challenges

Mr. Ofosu-Dorte rejected suggestions that the “legal door” is shut for individual bond holders who may want to challenge the offer, because of how it has been structured.

He advised government to allow those affected to seek legal solutions at the court.

“When people feel that they cannot get redress on their concerns there is that likelihood that they could take the law into their lands”, he warned.

Is Government Bankrupt? 

Mr. Ofosu-Dorte is of the view that government is bankrupt.

He argued that legally differing financial obligations and payment can be described as bankruptcy.

“As a company, if I cannot pay my debt as they arise or the amount of liabilities are bigger than my assets , then one is bankrupt and that’s how the law defines it”,  Ofosu-Dorte added.

“I don’t think that government itself is happy about the situation, when you have challenges in paying people”  he added.