Issac Adongo –MP, Bolgatanga Central
Mr. Speaker, I feel very sad this morning. Not just because we’ve compelled our senior citizens who have served our country faithfully, have worked so hard to accumulate their pensions and when the vulnerable are the ones we prioritise, they are not the ones we take their monies, but unfortunately today, they are the ones we are taking their money and I don’t know the ones we are going to use those monies to serve.
But Mr. Speaker are we still a proud nation, are we suddenly no more a proud nation, that we are all over the place begging people we borrowed money from and telling them we can’t pay them and there are no consequences for this?
Mr. Speaker, next time somebody serves in public office and tells you I don’t want to be paid, you should be very careful, you should be extremely careful because free things are expensive and it is an example of what we are experiencing today.
Mr. Speaker if managing an economy is all about collecting people’s monies and loans, celebrating with kenkey and fish, and in the end run the economy into a ditch and refuse to pay them and use that to create economic stability, then we must as well outsource this country to an artificial intelligence, so they manage the economy for us because the management of an economy is a lot more than that.
Mr. Speaker, we are in this house, when they came trying to find different vehicles to hide our public debt, they came here and said the action can take $1.5million even without a balance sheet and it will not be a government of Ghana debt. They came here and said extra PLC can take almost GH10billion and it is not public debt. They came here and said they are bringing barter to build our roads in Sinohydro.
In the 21st Century they were doing “fankyene b3gye moko” (to wit bring pepper and collect salt) in Ghana, but how can these groups who call themselves property owning democrats are the ones collecting people’s properties.
So when they come telling you they are property democrats, think twice. They will come after your properties, they will come after your savings. Mr. Speaker they will come and destroy your banking sector.
We are taking 83billion and the impact is that the banking sector is losing in present value terms GH41billion, how do you expect a banking sector that is almost catalysed at 30billion to survive, to survive 41billion, so have you solved the problem? You’ve rather transferred the problem from government to destroy our banking sector.
Mr. Speaker, how come the Bank of Ghana that is supposed to regulate our banks was sleeping when the people were investing all their monies in government toxic assets.
We have a simple principle of single obligor limit. It is the law that says you shouldn’t ever expose yourself to one person, it turns out that 75% of all the monies in the banking sector was in government box.
71% of government domestic bonds were in the hands of these people and the bank of Ghana was watching all.
Mr. Speaker, our pension funds, the National Pension Regulatory Authority (NPRA) said go and risk 85% of your money on toxic government bond. Mr. Speaker, where does that happen? Today, we are here with this boring underwhelming statement. Mr. Speaker, we are not angry enough as a country, we are not hungry enough.
This cannot happen to anybody and yet you are wasting our money, you are taking our money and you are here reading this boring statement to us. Mr. Speaker, this is not a joke and you are even quoting the bible.
Which of the bibles are you quoting? Quoting the bible in taking our money? In making us poor? In denying the poor pensioner his money and you still are quoting the bible? He is the reason some of us don’t go to church because in the end this is what we will get.
Mr. Speaker, I want to make an appeal to you to refer this matter back to the Finance Committee for proper oversight, the bank of Ghana must come and explain to us how they allowed the banking sector to hurt itself. The pensioners must come and explain to us.
Mr. Speaker, the Ghana Amalgamated Trust must come to explain to us. Mr. Speaker, as we speak today, the Bank of Ghana is claiming it is going to throw $15billion at this point. Have we approved it, have we approved any $15b? They must come and explain to us how they are getting that money…
It is about our public debt and it is about who gave us the money. It is the banking sector that gave us the money and we knew with all the rating agencies down grading us, that it was going to crash and we were rather watching them until they crash, that is about DDE.
Mr. Speaker, the Finance Minister is required by law, under the Public Financial Management Act not to allow us to meet this problem, he is supposed every year in May when he is presenting the fiscal strategy document to cabinet for approval to accompany it with the debt sustainability analysis so that we are not caught by surprise. Is it the case that he has not been developing the annual debt sustainability report?
Is it the case that he has ignored the findings in those reports? He is supposed to present fiscal risk analysis to cabinet. Is it the case that he is not been doing it? How come we are suddenly surprised and we are losing our money?
Mr. Speaker, how are we going to convince any individual to trust in the state to give one penny to the state? We were taught in school, Mr. Speaker, that government debts are risk free. Ken Ofori Atta and his people are now saying it is a lie. So we should unlearn all that we learnt in school?
Government debt is now riskier than lending to Adonko. It is more riskier than lending to Adongo, so how do we now go back to reconsider the thinking of finance that when you give money to the government you can’t sleep peacefully.
That when you work and you take your pension lump sum and you decide to give to government and live on your coupons, please you’re naked because you’ll go hungry and you can’t buy your medicines and we are proud to come and stand here to read the bible and… how is that possible.
Mr. Speaker, there must be consequences, there must be consequences. People cannot destroy our livelihood, people cannot ruin us and when you ask them to leave their office they say they won’t move. The job that we are not paying you, you are not willing to resign.
How can we always be crying because you’re the finance minister? This matter must be properly investigated and I appeal to you not to end this matter to this route that he came. We must have proper process to provide oversight and give the people of Ghana assurance and not just go in vain.
Mr. Speaker I want to call on the finance minister to resign today by a public announcement here. You cannot be proud of this achievement. You went and told the investors in Euro bond market that you will produce 5000 barrel of oil. As a country have you even produced 200 barrels? Thank you very much Speaker
Kwaku Agyeman Kwarteng – MP, Obuasi West & Finance Committee chair
Thank you very much, Mr. Speaker and thank you honourable minister for the statement. Mr. Speaker, listening to my colleague (Adongo) it is clear, Mr. Speaker, that the debate as to how we got here will never end.
The debate as to why we have had the need to do debt restructuring in our economy cannot end, but Mr Speaker, one reality is not debatable. It is the fact that we are here and like many other countries, not only is our cedi under pressure, the cost of living is rising and our people are looking for solutions.
Mr. Speaker, it is our collective interest to come together as a people and find the kind of solution that will make our economy better, going forward.
Mr. Speaker, debt treatment and the Domestic Debt Exchange Programme that has been deployed by government is good, but it is not enough.
Mr. Speaker, the extent of our economy now will require more than a debt treatment. Mr. Speaker, not only should we support government to cut the interest commitments that has burdened our economy, we must also pursue an aggressive programme to rein in expenditure.
And we must do that, not just for today – we must do that going forward, Mr. Speaker.
I dare say, Mr. Speaker, that in doing this, and I speak not just to the executive, I also speak to us as members of Parliament.
In cutting expenditure, charity must begin at home! And we must lead by example! Mr. Speaker, how many times have we not heard the people who elected us into office saying that there are issues with the V8 that we use?! How many times have we not heard our people complaining about the ex-gratia that we take?!
Mr. Speaker, I am making the point, Mr. Speaker, I am making the point that the problem that we have on our hands today is not a debt treatment matter. There is the need to deal with the fundamental weakness that have characterised the management of our economy for decades.
We are reaping what we have sowed as leaders, governments and as a people. Mr. Speaker, it is not just the politician that should lead by example.
Our friends in labour should moderate the demand for increased wages; we must know that government expenditure can come from nowhere, but either taxation or borrowing and when we put pressure on political leadership, the consequence is what we see before us today.
Mr. Speaker, we should stop as a country because, Mr. Speaker, I said as politicians we must lead by example.
We are never going to address the problem on our hands by pointing political fingers at our opponents and hoping that when we come to power we will do any better if the fundamental weaknesses continue to exist.
Mr. Speaker, in conclusion, on the debt on the expenditures, we must simply stop distributing wealth we have not created. We must stop spending money that we do not have.
Mr. Speaker, it will even be sufficient to just rein in expenditure. Mr. Speaker, we must embark on aggressive programme to moblise more revenues from within ourselves.
John Jinapor, MP, Yapei-Kusawgu
Right Honorable Speaker, let me first of all thank you for demonstrating leadership. But for you, Mr Speaker, the Finance Minister won’t be here. It is not as if the Finance Minister requested upon you to come and brief the House.
Mr Speaker, it is leadership, both Majority and Minority, a Minority from the Minority side and with your good counsel, would have to pull the Finance Minister to come today [Thursday] to come and brief us on this very toxic Domestic Debt Exchange Programme.
Mr Speaker, the Finance Minister has spoken a lot and like you rightly said, we have elderly people, respected people, people from the international community seated there. When you digest all these, what does it mean? That is the most important thing. What has the Finance Minister told the people of Ghana?
Mr Speaker, I sum it simply that: if you evaluate what the Financial Minister is doing and evaluate what NAM1 of Menzgold did, the two are synonymous and the same. There is no difference. Mr Speaker, if NAM1 had gotten this condition, his financial instrument of financial company would have existed as we speak today.
And like Adongo said, there is a principle in Economics known as the Transversality Condition. The Transversality Condition states: “That so far as government survives, government will never default.” That is why when you are accounting for the capital pricing module, there is a free risk. The free risk rate is the rate that government gives. If you want more, that is if you want to take risk, then you go for a premium.
For the first time in the history of this country… For the first time, government is saying that it is so broke. The economy has been so mismanaged that they can’t even honour the coupon payment on monies that the government took from not just ordinary individuals, but from our old mothers and fathers whose survival, whose livelihood depends on the little coupons that they get.
Mr Speaker, let me do a quick analysis. If you were to invest GH100,000 – just GH100,000. Let us even assume that Mr Ken Ofori-Atta and the Finance Minister say they will give you all your money with the rate of inflation at more than 50 per cent in one year.
By the time you take your principal, the actual value, which is the purchasing power, would have been reduced to GH66,000.
And you can just check. Just check the value and discount it to the present value with that rate. If you apply the discounting factor, you will know the value of a future investment that you are supposed to earn.
As if that is not enough, Mr Speaker, the Bank of Ghana as at 2021 had advanced over GH30 b to the government. Then in 2022, the Bank of Ghana…and I remember the Honourable Ato Forson raised that issue that they were giving government so much money.
The Bank of Ghana issued a statement and told us that it is an overdraft. An overdraft is a short-term debt instrument because you must pay immediately.
Immediately the Minister for Finance heard this, he announced that he had converted it into bonds. Why do you do that? You see, the issue is credibility.
That is why the women and the men who are here…they don’t trust the Minister, because look, the President told us that there will be no haircut. It turned out that it is false. The Minister, himself promised us that individuals will not be part of this whole domestic debt exchange programme.
He is here. He is on record…he is on record. Then, on the eve of Christmas, he issued a statement that he will now exempt pensioners and he is bringing individuals into the whole fray.
Mr Speaker, this is a serious matter. This is not NDC matter. This is not an NPP matter. This is a national issue where all of us have to put our political differences aside and look straight in the face of the Minister and tell him that Mr Minister, you will not touch the pensioners today, you will not touch them tomorrow.
Mr Speaker, this House will plead with you, and I plead with leadership that we should pass a resolution that for the first time, we are putting our political differences aside…we should pass a resolution telling the Minister… I am not interested in his resignation.
If he does not want to resign, that is their own cup of tea because the problem is not Ken Ofori Ata. The problem is Ken Ofori Ata, Dr Bawumia and Akufo-Addo. The trilogy…these three…these three are the problem of Ghana.
And Mr Speaker, problem cannot solve problem; solution solve problem. I am, therefore, calling on Parliament to pass a resolution compelling the Minister for Finance…just as he has done in paragraph 27 page 7 that all pensioners would be exempted from domestic debt exchange…not just exempt them, the bond holders, the pensioners, individual bond holders, their coupon rate, their principal and the time of the original agreement should be suspended and must stand and stand firm as far as some of us are concerned.
Mr Speaker, we must learn as a nation. I want to commend people who have stood with us. People like Kwame Pianim, people like Kofi Amoabeng, people like Sophia Akufo and even in this House. I salute the venerable Majority Leader, the Honourable Osei Kyei-Mensah Bonsu for his stance on the individual bond holders as far as we are concerned.
You have demonstrated true leadership, Leader, and I call on you to do same to the old men and women watching us today.
Mr Speaker, there are three ways that government raises revenues and Honourable Kwaku Kwarteng, you mentioned two. One is taxation, two is borrowing, but there is a third one—printing of money. How can the Bank of Ghana advance more than 40 billion to the Government of Ghana in one fiscal year? What is the size of Ghana’s economy?
I am not surprised that the IMF has appointed Leonard Tsumo as the Financial Supervisory Advisor to the Bank of Ghana. Mr Tsumo, please let me thank you and welcome you to Ghana.
Let me plead with you…please open your eyes at the Bank of Ghana. I cannot trust that Governor in one way or one bit. I beg you, open your eyes. Scrutinise the documents and ensure that the right thing is done because in this chamber, when they brought the Sino-Hydro Agreement, we cautioned them. It is not as if we did not caution them.
We are also Ghanaians. Yes, we might be interested in political power, but we are Ghanaians. We told you that your so-called barter trade would not work. Today, you have gone round and round and you are here.
Mr Speaker, on that note, I want to end by appealing to you that the Fiscal Responsibility Regulation that was suspended ought to be reinstated so that we can avoid this.
Abena Osei Asare – MP, Atiwa East & Deputy Finance Minister
I thank you, Mr. Speaker, for the opportunity and I also want to thank the people of Ghana for the immense support enjoyed from you in these difficult times. Indeed, it hasn’t been easy but for your support we have come this far and for that we are grateful.
Mr. Speaker, I also want to use this opportunity to thank all those who participated in the domestic debt exchange program. We are grateful to you for your support.
Mr. Speaker, I believe that this is one of the processes that will get us out of where we are to a safe landing zone, where we can all work together to bring our economy back on track. Mr. Speaker, before I continue, I just want to put out some impressions that have been created that are not true.
Mr. Speaker, on the 3rd of February, 2023 we met the majority side and the parliamentary service staff and in that meeting we mentioned that we want Parliament to give the Minister for Finance an opportunity to come over here and then explain the debt exchange program to us. So, if we stand here and say that we never did anything like that and that the minister was hauled here –
Mr. Speaker, on the 7th of February, if you remember, I even mentioned it. We mentioned it on the 3rd of February when we met parliament and the government business and so we are waiting for the Speaker to give us a date, so Mr. Speaker, that is something that has been on the table and we were waiting for the appropriate time to do that and we are grateful that you have given us the opportunity to do that today.
Mr. Speaker, secondly, I also want to put out there that an impression has been created that the government is taking away people’s money. Mr. Speaker, we have a situation on our hands that I cannot continue to redeem the bonds that I have taken from you, because of where we are, our debt levels have become unsustainable.
Mr. Speaker, anytime you mention our debt, our brothers from the other side fumble. These are debts we got right from the first day Ghana borrowed to date. This is not an NPP debt. This is a national debt that was created from the first day Ghana decided to borrow to date, so let’s get that clear.
Mr. Speaker, last year, we were servicing our debt until things started getting difficult. Things started getting difficult not only because of domestic issues, but also external issues. So, it became difficult and we were using about 70% of our tax revenue to service interest payments alone.
The government says I cannot continue like that, I have to do something about it and we believe that with the support we have enjoyed so far, we can move to the next stage. I just want to put on record, Mr. Speaker, to explain that the domestic debt exchange is in three categories.
The first one is category A, where we have people below the age of 59 years, the government is saying that you will get your principal, you will get your coupon of 10%. Initially when we came out with the debt exchange, we had wanted to pay within 12 years.
Upon consultation with several members, the government said I am bringing it to five years for those below 59 years, it is going to be 10% you are going to get your coupon at 10% and by five years’ time you should get your whole amount, that is the whole principal. So, Mr. Speaker, nobody is taking away anybody’s money.
And when you come to the category B. Mr. Speaker, these are people 59 years and above. We agree with the sentiments that have been raised…, looking at the 12 years of the various bonds that we had, the effective interest was going to be 18.5%.
The government says looking at the situation I find myself in right now, the 18% is going to be difficult for me to pay, but I am going to redeem the coupons for you. So, I am giving 15% instead of the 18.5%. So yes, we understand you have sacrificed about 3.5% and we really appreciate that. Our pensioners, we really appreciate the sacrifices you have made for us and we are grateful for that.
So, Mr. Speaker, it is 15% and that 15% the government is saying within five years you can have your principal. Mr. Speaker, for anybody who signed on the domestic debt exchange programme, if for any reason you want your money because something has come up with this debt exchange, you can go on get your principal and the coupon due you.
Mr. Speaker, in the third category we have any other person that does not fall within category A or B; these are the banks. And thankfully, we saw some 6% participation in the category A which is those below 59 years, and for category B with our pensioners we saw 0.43% participation, and for the category C which is banks and insurance and all that was about 78%.
Mr. Speaker, it is something that we need to move to the next level. In addition to that, Mr. Speaker, there are three outstanding revenue measures that we believe that if we should pass, will also help us reach an agreement come March.
So, we are pleading with the House that the income tax bill, the growth and sustainability bill, as well as the amendment of the excise duty tax. And we are asking that you support us pass these three outstanding revenue measures to compliment the debt exchange that we have done to help us reach an agreement with the IMF.
Mr. Speaker, with this opening we believe that we can also go ahead and engage our external borrowers and make sure that they also come on board because, Mr. Speaker, this is something that we believe we must do to help our economy move from where we are now to a place where we all can feel comfortable, inflation rates can drop, bring food prices down and make the economy start to work again.
Mr. Speaker, the government spent billions of cedis to restructure the financial sector. This same government will not see to it that the financial sector collapses. That is why government is doing everything possible to make sure that even in the midst of where we find ourselves it will support the financial sector as well.
But Mr. Speaker, we thank our colleagues on the other side, we thank our pensioners, we thank the people of Ghana. And we ask that they continue to support Ghana and this government. Thank you very much Mr. Speaker.
Concluding remarks by Ken Ofori-Atta
Thank you very much Mr. Speaker. And really much appreciation for the comments that has come from the submission that I made.
Mr. Speaker, we came in 2017 and met a very difficult economic situation. Mr. Speaker …Mr Speaker ,we did not shirk away from it and during the period through 2020 as you said, Hon Okudzeto Ablakwa mentioned, we were the poster child and the Black Star that was shining, so yes, in this current predicament we would also navigate ourselves through it successfully.
Mr. Speaker, on the issue of whether we have negotiated properly or not, let me be very clear that yes, Sri Lanka might have negotiated and got Staff Level Agreement (SLA) sometime in August. The consequence of that is they are still not getting board approval.
We can’t afford that; we have to get a board approval by March and we are en route to be successful with that, and that is important.
Mr. Speaker, we mentioned the impossible triangle of the fiscal consolidation debt treatment and financial assurance.
Mr. Speaker when we talk about fiscal consolidation, it’s really not only about revenue increases that we are looking to do. A significant issue as was raised by the Chairman of the Finance Committee is one thing and those have come very clearly in our engagements over the past few months in our assessment of what we must do, to do that.
So, Mr. Speaker, I assure you that those expenditure controls would happen. Mr. Speaker we have been very passionate about the issue of pensioners and retirees. Mr. Speaker, I just want to be very clear, that the reason for this whole debt treatment to be voluntary is because you did not want to take anybody’s money from them. Completely voluntary, that is your choice or not and we will have to manage that, so that was very clear.
Mr. Speaker, we then also believe that the Debt Restructuring would be successful, which means in effect that we are going to get very few of the old bonds in the system, and it’s important to realise that.
Now, the government does not control the market so how do you then shield all those who may not voluntarily tender from the vagaries of the market, and that is why Mr. Speaker in realising that 80% percent of retirees bonds will mature in over 5 years we, therefore, brought the maturity to 5 years, so that the time value of money was saved and captured. But more significantly, Mr Speaker, it also meant that in the event of emergency, you were holding a paper that was common, that was tradable, so that you then give a choice for bond holders to do.
Most of them declined, which is perfectly fine, so that they will hold the old bond and, therefore, in yesterday’s discussions with them, I sent a letter out to their convener stating what my colleague deputy minister mentioned very categorically that all pension bond holders who opted not to participate in the exercise are exempted from the DDEP.
But Mr. Speaker, as we advise people about the future in a very tough economic circumstances, I think it is our responsibility for everybody to be aware of the risk that may occur on the market and that is why we encourage that people in their bonds, but clearly we have also stated categorically that your interest coupons and your principal would be honoured.
So Mr. Speaker, let us put it to bed here that government at no point in time looked at an opportunity to take money from pensioners, because we made it Mr. Speaker, voluntary, so you cannot say that a voluntary exercise means that I am taking money from you.
We gave an option, which we were free to take and most of them legitimately believe that they will hold their bonds to the very end.
And if the bulk believe they are going to hold their bonds to the very end, they do not require any option, which is perfectly fine and we assure them that the coupons would be honoured, your principal would be honoured.
They then went further that even though you have given me that assurance, I still want to hear the word exempt, so yesterday we did that. So, please the issue, as Biblical as it is, protect your orphans and your widows and your old people .Yes that is why it was voluntary from the beginning; no coercion by the state or our people and our president was very clear about it.
Don’t go and legislate it in which you will then say to government all your bonds have been changed, but make it voluntary so that it is their choices.
Even though it is voluntary, it will then be subject to market vagaries and so therefore, what option do you give them? And that is why we came up with 15% allowed and brought the maturity to five years. So you can then begin to ask what is the problem and that is where majority leader is saying maybe we did not communicate right but truly, all of us sitting here, all the hyperbole, all the discourse, this is what the government of the people of Ghana did and that is fact.
So Mr. Speaker I really appreciate this opportunity to make it very clear to us that this is a caring government, was clear on what it is meant and we made sure we put things in place and make it very clear, so that people do not lead people astray .
Mr Speaker, we thank you for that. With regards to the mention of Sri Lanka and Jamaica, Jamaica was a very different time, Sri Lanka they are still trying to get a decision fast from the board and, therefore, the reason why we negotiated without apology. And we will not, Mr. Speaker, run away from this problem and we are confident that we will solve it.
So, let me Mr Speaker, thank you very much for this opportunity. Let’s rest assured that we will stablise this economy and get our growth and get our shine back as we should.
Mr. Speaker, thank you, Honourable members, thank you.