Finance Lecturer, Professor Lord Mensah, has rejected suggestions  that  exempting Pension Funds from the Debt Exchange Programme will come at a great cost to government in its quest to reduce  Ghana’s debt substantially by 2028. 

Speaking on PM EXPRESS BUSINESS EDITION with host George Wiafe, Professor Mensah noted that there are still other avenues that government can explore.

He cited an example that the amount set aside for capital expenditure in the 2023 Budget as well as revenue to make up for the expected shortfall as a result of this exemption.

“Government sacrificing about ¢41 billion from Pension Funds as interest payment should not be a challenge at all. This is because, there is still a way out, that government can re-adjust and re-align some of the expenditure lines to make room for this exemption”, he maintained.

Professor Mensah argued that there are several avenues in the 2023 Budget that government can explore to ensure that the exemptions granted do not affect efforts to reduce the debt stock by about 55% of the debt  to Gross-Domestic-Product (GDP) ratio by the year 2028.

https://www.youtube.com/watch?v=nowHWXnAsrA&feature=youtu.be

There have been concerns that government granting this exemption, may result in the external bond holders, pushing for a similar move.

But Professor Mensah disagreed, stating that the conditions are different.

He pointed out that external bond holders, have in the past benefited from high interest rates offered by the government.

“These investors are long term in nature, and they will not be responding immediately to some of these measures that government is undertaking”, he said.

Response from Organised Labour and impact on economy

On his part, the Deputy Secretary General of the Trades Union Congress, (TUC), Joshua Ansah, described the move by government to exempt the pension hunds as very important.

He however rejected concerns that the exemption will come at great cost to the economy and the exchange programme in the future.

“The attention now moves to the base pay for public sector workers negotiations, which will look forward to reaching an agreement before the end of 2022”, he added.

He noted that the latest development by government shows that government has shown some good faith when it comes to listening to the concerns of organised labour.

“It is not fair for workers to be punished for a programme that was not caused by them”.

Reacting to this, Professor Mensah noted that the current challenges have come about as a result of government’s failure to carry out the necessary consultations with organised labour.

Speaking on the same programme, economist, Professor Ebo Turkson advised government to work hard to ensure that the debt exchange programme works to reduce any negative impact on the economy as well as the associated shocks. 

He added that government must do more by cutting some of its expenditure to demonstrate its commitment to scarifying in these challenging times.

Base negotiations

Mr. Ansah again disclosed that Organised Labour is now moving fast to close discussions with government on the base pay.

“We work hard to ensure that there is a meaningful base pay reached before the end of the year”.