Catholic Bishops in Ghana have raised their voices against the proposed domestic debt restructuring process saying the program has significant consequences on the citizens of the West African country.
Ghana announced its plan to exchange some US$10.5 billion of existing domestic bonds and notes held by different local investors for a package of new bonds with different payout dates.
The domestic debt restructuring plan, which needs to be accepted by the bondholders, is one of Ghana's efforts to restructure its dues before receiving a US$3 billion bailout requested from the International Monetary Fund (IMF). The IMF bailout is to help the West African nation restore its financial stability.
In a Friday, January 27 statement, members of the Ghana Catholic Bishops’ Conference (GCBC) say while they are not against efforts to disrupt efforts to make the nation economically sound, the government needs to seek less burdensome and sustainable solutions to get the country out of its current economic crisis.
The Catholic Bishops say, “The far-reaching consequences of the proposed domestic debt restructuring program on the financial sector (banks and insurance companies in particular), and the cascading implications on individual holders of government instruments, once believed to be the safest investments, are too damaging, not only for investors but also their effects on the bargaining power of households and on the poor.”
“The strong resistance to the debt restructuring from domestic resources to meet the IMF bailout conditions is a natural response from those directly or indirectly affected,” they say, adding that the options for the government to resolve the economic crisis “appear limited”.
“We, therefore, hold the position that, given the issues that have arisen with government's resort to an IMF bailout, and the mistrust it has garnered, does not make the domestic debt restructuring option appear viable,” they say in the statement signed by GCBC President, Archbishop Matthew Gyamfi of Sunyani Archdiocese.
As a way forward, GCBC members say the government “should involve all stakeholders, particularly individual and financial institutions directly affected, and carry them along in addressing the problem.”
They also call on the government to “vigorously pursue some debt forgiveness and/or deferment, where feasible so that if at all, the domestic debt restructuring burden could be reduced drastically and its impact on stakeholders minimized.”
To win the international community over in pursuit of the IMF bailout, GCBC members say, “Government must present a posture that is consistent with the fact that the country is in dire straits or crisis.Some of the issues that could be presented include drastic government expenditure control by reducing the number of government appointees; suspending non-essential projects; and a review of the free Senior High School (SHS) policy, Catholic Bishops in Ghana say.
While they expect the government to consider their suggestions, they say, "We humbly appeal to Ghanaians to appreciate the current economic situation and understand that there will be difficulties in the coming months while the problem is solved permanently."
GCBC members say they believe that there will be goodwill, transparency, and commitment to the common good in the debt restructuring process.