Former Minister responsible for Finance, Hon. Seth Terkper, has urged the Nana Addo Dankwa Akufo-Addo-led New Patriotic Party administration to call on the World Bank and other development partners to assist them to settle those holding Ghana bonds.
According to him, this option is far better than including all of them in the ongoing Debt Exchange Programme.
Speaking on Joy FM’s Super Morning Show in an interview monitored by InsiderGH.com, Mr. Terkper explained that when this is done, it will drastically reduce the burden on investors and also save the economy and its participants.
“The solution may be fiscal or monetary. There are financial institutions, especially those we called primary dealers, those who buy the most government bonds – the ones who can even come in and stand in for government when the auction is failing. They may be more liquid and so we may want to prevail on them to set up funds,” he stated.
According to him, “if somebody wants to offload out of hardship, we can determine the criteria for those who have to pay children school fees and whatever we invested in the bonds for various reasons.”
“They [bondholders] can go to these institutions, offload their bonds for a discount and when the conditions improve they can sell at a higher rate,” he added.
He noted that “this is what happened during the global financial crisis where governments stepped in. We can prevail on the development partners – the World Bank and others who have had experience in this to set up a fund to pay those who are really in need or set up a ‘bad bank’ and when the time are good you can buy back the bonds”.
According to him, when the US Federal Reserve bought the bad debt from the banks, it offloaded those bonds when the condition improved and made 3 trillion US$ profit.