An economist Warns that the Inclusion of Treasury Bills in Ghana’s Debt Exchange could Lead to the Collapse of the Financial Sector of the Country.
The government has been relying solely on treasury bills to sustain itself financially, given the current financing landscape. However, it is unlikely that the government will announce any plans to introduce new means of financing. This reliance on T-bills means that if this funding source were to disappear, the regime would be in danger of collapsing.
Despite these concerns, the government will continue to keep the window open for the market, as a way of interacting with it. However, there is a growing lack of trust in the government’s statements, and it is uncertain how long this approach will be sustainable.
Furthermore, if care is not taken during the programme, participating financial institutions may experience a weakened balance sheet. The terms adopted by the government could potentially weaken the balance sheet of these institutions if further revisions are not made to the terms of the domestic debt.
Even without introducing a debt exchange, government financial instruments are already showing explicit income losses when marked-to-market. As a result, some banks may need to bring in additional capital or be recapitalized.
If the banks’ balance sheets were assessed today under IFRS 9, it is likely that several banks would be at risk of collapse.