The Minister of Finance, Ken Ofori-Atta, has admitted that government’s decision to exempt pension funds from the Domestic Debt Exchange Programme will have dire consequences on the programme and the country’s economy.
The government on Thursday acquiesced to demands by the Organised Labour to exempt all Pension Funds in the Domestic Debt Exchange Programme following threats by organised labour to embark on a strike.
Addressing the media after signing a memorandum of understanding between government and organised labour, Mr Ofori Atta said the exemption of pension funds from the Domestic Debt Exchange Programme comes at a very serious cost.
“Obviously the decision of exempting pension funds is at a cost and we have committed government and the organised labour to work together to ensure that we find means of plugging that hole.”
Meanwhile, the Director of Operations at Dalex Finance, Joe Jackson, says the debt restructuring programme will be doomed if an immediate alternative is not found to replace the pension fund which has been exempted.
Mr Jackson said there is no local option to replace the pension funds, but the government can turn to the external bondholders for help.
“I don’t think on the domestic front, there is going to be an alternative, the programme has been announced, the deadline is looming and so this exemption of pension funds will just leave a hole in domestic debt sustainability,” Mr Jackson said on Eyewitness News on Thursday.
He added “the hole must now be transferred, possibly, to the external front by negotiating harder or offering a severer cut or reductions. It is hard for me to see how they can transfer this to another local constituency…I suspect they will transfer their attention to the foreign debt holders and if that fails then we are in trouble.
