Refusal to accept debt exchange will be more chaotic – Joe Jackson warns

The Director of Business Operations at Dalex Finance, Joe Jackson, has urged institutional bondholders to accept the government’s debt exchange programme.

Mr Jackson said despite the painful cuts that the fund managers will have to endure on their bonds, not accepting the programme will be more chaotic and extremely punitive for them.

Launched by the Minister of Finance, Ken Ofori-Atta, on Monday, December 5, the domestic debt exchange programme requires institutional holders of the eligible bonds to agree in writing to the Central Securities Depository (CSD) to exchange their current holdings for the new ones.

Interested investors have up to 4:00 p.m on Monday, December 19 to confirm their willingness to participate, according to the Minister of Finance, who said the exercise was an avenue for Ghana to bring its debts to sustainable levels to be able to qualify for financial support from the International Monetary Fund (IMF).

Speaking on the Citi Breakfast Show on Thursday, Joe Jackson said the option by the government to compel institutional bondholders to accept the debt exchange is more reasonable than any other alternative.

“Between chaotic default and organised default, I will every time choose organised default. So I sit here I have to choose this, [because] the alternative is utterly chaotic.”

Mr Jackson also blamed Ghana’s current economic crisis on excessive borrowing to fund irrelevant projects and on consumption.

“If you take Ghana over the last few years, and when we pay salaries and also pay the interest on our debts, all the money we’ve earned is gone. Salaries and interest on our debts consume more than a hundred percent of what we earn.

“The money we spent on Free SHS was what we call deficit financing or borrowed money. They borrowed to build hospitals, borrowed to construct roads, and whiles borrowing is not wrong, you must borrow and spend on projects that will pay for themselves and if you borrow, and you don’t spend on an activity that pays for itself, then, your borrowing is wrong, and you are going to get to some time where you have to pay, and you don’t have enough productivity and income to pay for it.”

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