Banks resist further participation in domestic debt exchange programme
The Ghana Association of Banks has declared that its member banks will not participate in any further Domestic Debt Exchange Program (DDEP) until they receive official communication from the government regarding the conclusion of the existing exercise. The Association’s CEO, John Awuah, emphasized that any additional burden on banks could lead to the collapse of many banking operations.
The government had previously reached an agreement with banks to restructure ¢15 billion of locally issued U.S. dollar bonds and cocoa bills, a pivotal condition for the IMF deal. However, there are indications that another round of the DDEP is in the offing, which has raised concerns among banks.
John Awuah expressed the banking sector’s lack of appetite for another round of the DDEP, highlighting the considerable toll it has already taken on local bondholders and the central bank. He stressed the need for certainty within the financial markets and called for clear messaging from the government to restore investor confidence in the local market.
While the Minister of State at the Finance Ministry, Dr. Mohammed Amin Adam, urged banks to participate in the upcoming exchange, John Awuah emphasized the industry’s reluctance due to the cumulative impact it has experienced.
He also discussed the banking sector’s efforts to manage risks and challenges during these difficult economic times. Awuah noted that banks had built up the necessary capital buffers to weather the storm but acknowledged that some may require capital top-ups to meet regulatory requirements.
In conclusion, John Awuah highlighted that Ghana currently faces challenges in attracting capital, given unfavorable market fundamentals. Despite these hurdles, he remains optimistic about Ghana’s gradual economic recovery, echoing recent comments by the IMF.
