Joe Jackson urges Ghana government to capitalise on cedi gains and return to capital market – Ghana Business News
Mr Joe Jackson, the Chief Executive Officer (CEO) of Dalex Finance, has called on the government to leverage the recent appreciation of the Ghanaian cedi and return to the international capital market with medium-term bonds.
The recommendation comes against a backdrop of Ghana’s recent exit from the international capital market in mid-2022, triggered by factors including the difficulties in accessing international financing and subsequent credit rating downgrades.
The CEO said this on a televised current affairs programme where the cedi performance was the focus of discussion.
Ghana’s inability to access the Eurobond market forced the country to rely more heavily on domestic borrowing at higher interest rates and explore alternative financing options like syndicated loans.
This situation was further compounded by the country’s unsustainable debt levels, which ultimately led to the implementation of the Domestic Debt Exchange Programme (DDEP) in December 2022.
The DDEP, which aimed at alleviating the country’s debt burden, involved the restructuring of domestic bonds leading to significant losses for some creditors, including pension funds and individual investors.
Mr Jackson acknowledged the painful but necessary steps taken by the government, including the DDEP, to address the economic crisis.
He highlighted the significant drop in the 180-day Treasury bill rate from 28.68 per cent on March 31 to 15.7 per cent as of May 15, indicating a reduction in government borrowing costs and a positive shift in economic fundamentals.
“This reduction in T-bill rates is crucial. If the government had continued on its previous trajectory of high debt service, our debt situation would have become even more unsustainable. This improvement signals a real commitment to bettering our economic circumstances,” he said.
Mr Jackson noted the cedi’s appreciation of up to 18 per cent from an earlier high of 14.69 cedis to the dollar and to 12.41 cedis to world reserve currency was a direct consequence of those positive indicators.
He said those improvements created a window of opportunity for the government, which it must capitalise on and consider issuing medium-term bonds in the international capital market.
“The government is talking about coming back to give us medium-term bonds. Given this current investor sentiment, we should,” he said.
However, he cautioned that a failure to act decisively could result in a missed opportunity, especially if the commitment to fiscal discipline wavers.
He underscored the importance of addressing the energy sector debt, a significant fiscal risk.
Mr Jackson emphasised that sustaining the cedi’s appreciation and maintaining fiscal prudence were crucial for long-term economic stability.
He commended the collaboration between the Central Bank and the Ministry of Finance in pursuing their respective mandates to achieve macroeconomic stability.
Source: GNA
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