A Governing Council Member of the Ghana Securities Industry Association, the umbrella body for organizations licensed by the Securities and Exchange Commission, has warned that the potential impact of the government’s debt exchange programme could be very damaging to the financial sector.

Mr Kisseih Antonio who is also the Managing Director of Sentinel Asset Management said the debt restructuring announced by the Finance Minister was inevitable but added that the government needed to undertake deeper expenditure cuts to get the support of the public.

“We know that there are certain expenditure containments in the budget, but we don’t think it goes far enough. We think that expenditure should be cut to the bone. We see these changes which have been made as more cosmetic than real,” Mr Antonio said on the Citi Breakfast Show on Tuesday.

Mr Antonio added that if not handled well, the confidence of investors in the economy in future would be damaged.

“What this is doing is, it is damaging the confidence of investors and I think the potential fallout from this will be very serious on the capital market and the capital market is a very crucial part in funding businesses and even government. In trying to solve one problem, I think we need to create a good balancing act in order not to create more problems down the road.”

Ghana is at the doors of the International Monetary Fund (IMF) seeking a $3 billion support program.

The country has also been shut out of the international market due to issues of creditworthiness, forcing the government to go on the route of debt restructuring to bring the monies owed to sustainable levels and meet the lending requirements of the IMF.

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.

The annual coupon on all of these new bonds will be set at 0% in 2023, 5% in 2024 and 10% in 2025 until maturity.