Associate Professor of Finance at the University of Ghana Business School, Professor Godfred Bokpin says it is time for the government to effectively take decisions to ensure it secures a programme after the Staff-Level Agreement with the Fund.

The International Monetary Fund staff and government on Tuesday reached a Staff-Level Agreement on economic policies and reforms to be supported by a new three-year arrangement under the Extended Credit Facility (ECF) of about $3 billion.

Prof. Bokpin said by his agreement with the country, the IMF has demonstrated enough commitment and responsibility to help the country secure an economic programme.

He explained that government must now act to ensure that there is no delay in getting approval from the IMF board.

According to him, the blame will squarely be at the doorstep of the government if it fails to obtain board level approval.

“If you see where we are, the IMF has put the ball in government’s court. They have demonstrated commitment, they have worked around the clock to reach a Staff-Level Agreement. Now, if it delays before it goes to the IMF Executive Board, all that the Fund is saying is that then you should know it is up to Ghana. Because the IMF does not restructure country’s debt for them,” he said on Top Story, Tuesday.

Government has already announced a debt exchange programme as part of its debt restructuring process to get approval from the IMF Executive Board.

As part of the debt restructuring process, there would be a slash in interest payments for domestic bondholders to zero per cent in 2023 and five per cent in 2024.

Again, existing domestic bonds as of December 1, 2022, will be exchanged for a set of four new bonds maturing in 2027, 2029, 2032 and 2037 – all in a bid to restore the nation’s capacity to service its debt.

Also, eligible domestic bondholders who fail to participate in the exercise may have their bonds transformed into liquid assets at a low cost.

However, Prof. Bokpin fears the current form of the debt exchange programme announced cannot work.

He said the current programme is “draconian” and harsh for bondholders to accommodate.

“Unfortunately, the approach the government has used is what has elicited the pushback. The government more or less tried to trick and ambush the people, but we do not work that way. Consultation, consensus-building is the way to go…what has been announced for the domestic debt is too draconian, stiff and drastic.

“I would have been surprised if the participating financial institutions had accepted the debt offer under these current terms,” he lamented.

He advised that since the process is a prior condition for government to secure an IMF programme, it should consider revising the terms of the debt exchange programme.