President of the Ghana National Chambers for Commerce and Industry (GNCCI), Clement Osei-Amoako, has urged government to address concerns of the private sector on the back of anticipated negative effects from the Domestic Debt Exchange Programme (DDEP).
Available data suggest that a weakened banking sector could impair financial intermediation, leading to hesitance of banking institutions to provide funds for individuals and businesses. This could then threaten future economic growth and development.
More worryingly, it is expected that the present economic challenges, coupled with the DDEP, may compromise the ability of individuals and businesses to pay their loans.
There have been calls by experts for government to provide support mechanisms for businesses that may be affected by the Domestic Debt Exchange Programme, due to its potential impact on the private sector and wider economy.
In contrast to the private sector, the Ghana Financial Stability Fund is being established to provide an additional layer of protection for the financial sector – including exclusive liquidity arrangements with the central bank to safeguard the banking sector.
In an interview with B&FT at the Chamber National Dialogue Series dubbed ‘Impact of the Domestic Debt Exchange Programme on the Private Sector’, Mr. Osei-Amoako stated that the DDEP has brought a lot of agitation to both individuals and the private sector; and as a result investors have also come in to criticise the DDEP.
The president suggested engagements with stakeholders in the private sector on the issues, as the sector looks forward to reorganising for the future amid an expected tighter lending environment.
“For us as a Chamber, we have made a lot of noise as to how government will have to meet with the stakeholders to address the issue rather than imposing it on them,” he said.
“Everything that government does has consequences for the private sector – and for that matter, the economy as a whole; so we assembled academic practitioners to come in today and give us their view as to how we will be able to surmount the issues going forward.
“The consequences of the matter are difficult, but then we are asking ourselves as Ghanaians to hold the fort and try as much as possible to work within our strength to reposition the country, because at the end of it all we will lose. So we are asking that government should – once its leading in this debt sustainability – must also not lose sight of the fact they should not be over-borrowing from the Bank of Ghana to cut down the private sector,” he added.
