Dr. Mark Assibey-Yeboah, a former Member of Parliament for New Juaben South has suggested that government should allocate a portion of the $600 million received from the International Monetary Fund (IMF) to settle outstanding debts to bondholders and creditors.
Additionally, he proposes using the funds to expand the Livelihood Empowerment Against Poverty (LEAP) program, benefiting more individuals.
Dr. Assibey-Yeboah asserts that such payments would play a crucial role in rebuilding confidence in the financial system. Furthermore, he believes it would aid in revenue mobilization and provide protection for the most vulnerable individuals affected by rising prices and the removal of electricity subsidies.
In summary, he recommends utilizing a portion of the IMF funds for debt payments, expanding the LEAP program, and addressing the impact of subsidy removals and price increases on the less privileged segments of society.
“With USD600 Million disbursed by the Fund, we could ringfence and apply part of the proceeds as follows:
Payment of Coupons/Principal of Bonds (and Cocoa Bills):
The Ministry of Finance projected an 85% Participation Rate in the Domestic Debt Exchange. This means that only 15% of individual bondholders, excluding Pension Funds and Cocoa Bills are ‘original’ bonds that have to be settled in the near term.
The government needs to prioritise the payment of coupons/principal of the aforementioned bonds to restore confidence in the financial system.
Currently, market players are interested primarily in 91-day Treasury Bills. Restored confidence will push investors to 182-day and 1-year Treasury Bills, giving the government some breathing space.
Servicing of Bilateral Debt: Following the suspension of interest payments on Eurobonds and Bilateral loans, almost all critical infrastructure projects have grounded to a halt. Contractors have demobilised from site. Turnkey projects like the KATH Maternity and Children’s Block (54% completion), Eastern Regional Hospital (50% completion), Obetsebi Interchange (90% completion), Nungua Beach Road (80% completion), Takoradi PTC Interchange (85% completion), Czech-Funded Bridges (70% completion) amongst others are all being discontinued. We should resume interest payments on these critical loans. Doing so will give the contractors impetus to remobilize and go back to site, albeit, at an increased project cost.
3. Enhanced LEAP:
The gradual removal of ‘subsidies’ on electricity is biting the poor very hard. With food and energy inflation persisting, LEAP, our social protection program that provides cash transfers to very poor people must be enhanced and expanded,” he wrote in reaction to the receipt of the bailout cash by Government.
The government has indicated that the money, which forms part of $3 billion expected from the IMF, will go into budgetary support to help bring down inflation according to Finance Minister Ken Ofori-Atta.
The Government sought a bailout from the IMF last year to enable the balance of payment challenges.