Debt Restructuring: Protect principal of households, pensions; go after profitability of banks, others – Alhassan Andani tells Gov’t
Erstwhile President of the Ghana Association of Bankers (GAB), Alhassan Andani, has urged government to ensure the protection of investment principal of households, pensions in its debt securities.
Speaking on the PM Express Business Edition monitored by norvanreports, Mr Andani averred government in its debt restructuring programme should go after the profitability of banks by requesting for interest discounts on its debts.
According to Mr Andani, any attempt by the government to request for a reduction or ‘haircut’ in the overall loans owed banks, might affect the principal investment of households, and pensions in its debt securities.
“If you are doing debt restructuring, ensure you don’t touch depositors funds even in risk assets created by banks in government debts.
“You can touch shareholder funds but not depositors funds. And one way to go about doing this, is by requesting for a discount on interest.
“That’s the way to go, because in that way, the bank’s can at least still return depositors monies, just that the profitability of banks will be affected.
“So government should protect households who have their savings in its debts through the banks, it must also protect pensions. It must not hurt their principal investment,” he said.
“There are sectors of the economy that have pooled resources and are taking advantage of the high interest rates on government debts, government can touch their profits but not the principal investment,” he added.
Meanwhile, the Finance Minister, Ken Ofori-Atta has announced plans to constitute a 5-Member Committee consisting of prominent financial services professionals to lead extensive stakeholder engagements across all the key segments of the financial sector – banking, asset, management, pensions, and insurance – as part of moves to protect the financial system in the debt restructuring programme.
The announcement of the Committee Members is expected to be made in the coming days.
