Dr. Ernest Addison, the governor of the Bank of Ghana (BoG), has described the steps the central bank has taken to assist local banks in coping with the impact of the domestic debt exchange program on their operations.
Prior to the launch of the initiative, the BoG conducted a stress test for the banks.
Some parties have expressed concern that the debt exchange will undermine regional banks.
For instance, in a letter to Addison on the domestic debt exchange program, Bawku Central Member of Parliament Mahama Ayariga said that the banks would experience capitalization and liquidity issues as a result of not receiving timely and proper coupon payments from their bondholder.
According to Mr. Mahama Ayariga, the Domestic Debt Exchange Program will weaken domestic private banks since they will have capitalization and liquidity issues because they won't get timely and adequate coupon payments from their bond holder (Government of Ghana).
"I also contend that, if the Ghana Financial Stability Fund is not entirely publicly funded, the directive from the Minister of Finance to the banks he has so severely weakened to approach the Ghana Amalgamated Trust Plc (GAT) for support from the GFSF exposes them to a takeover by investors in the GAT.
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"I also claim that, if GAT is not publicly funded, political favoritism and nepotism will influence the ultimate acquisition of the shares in the private banks once GAT starts to sell these shares to realize the investments made in those institutions.
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