Government and the Ghana Insurers Association (GIA) have agreed on the participation of insurance companies in the Domestic Debt Exchange Programme (DDEP).
Insurance companies will, therefore, participate in the Exchange on similar terms as the Banks, per the agreement, the government and GIA said in a joint statement seen by Thebftonline.com.
“This milestone on the back of the success with the banking industry has taken the Government closer to completing the DDEP which is a key factor to restore economic stability and growth,” the statement said.
Meanwhile, through the solvency window of the Ghana Financial Stability Fund (GFSF), the government will provide support for the insurance companies that are seriously affected by the DDEP to protect jobs and the industry’s stability.
In a related development, the Institute of Economic Affairs (IEA) is leading efforts to introduce a legislative cap on the amount of national debt that can be incurred by the Ghanaian Treasury and is courting the support of principal stakeholders to see it come to fruition.
The public policy think-tank is seeking an instrument that will impose and strictly enforce a ceiling of five per cent of Gross Domestic Product (GDP) on the fiscal deficit, in addition to a five per cent cap on the previous year’s revenue of the Bank of Ghana’s fiscal support to government – arguing that both elements have significant debt implications.
“The IEA is spearheading the passage of legislation to cap government’s borrowing. That is the only way to avoid reckless borrowing and uncontrollable indebtedness. The Institute calls on key stakeholders – including Parliament, Bank of Ghana, TUC and Civil Society Organisations (CSOs) – to support the process,” stated its Director of Research, Dr. John Kwakye.
The Institute also disclosed in a communique on the matter that it has, as part of the CSO Economic Governance Platform – to which it belongs, made this suggestion to the International Monetary Fund (IMF) team to consider as part of negotiations with economic managers of the country in regard to a possible programme.
The moves come after successive recommendations by the IEA on the subject as concerns over national public debt began to mount, especially in the last 18 months.