Government urged to start issuing local bonds
The Chief Executive Officer of Dalex Finance, Joe Jackson, has urged the government to return to the secondary market and begin issuing local bonds.
According to him, it is time to reduce the reliance on treasury bills, as they were never intended to serve as a permanent government financing tool.
He explained that the government’s inability to borrow from the secondary market stemmed from the recent debt crisis, one he believes the country is beginning to emerge from.
Speaking on the sidelines of the Business and Financial Times–Ecobank “The Money Summit,” he said, “First of all, T-bills were only meant to be a temporary way of financing a cash flow deficiency in the government’s finances. T-bills were never meant to be the method for raising funds for development or other long-term purposes.
“So, relying on the T-bill market is misusing them. When we fell into our crisis in 2022 and 2023, we became essentially so toxic that we couldn’t access the foreign markets. And due to the DDEP, we couldn’t issue local bonds either. That happened, but now, we have to move on,” he added.
The Money Summit was held under the theme: “Optimising Investment and Pensions Management: Strategies for Sustainable Retirement Income and Economic Growth.”
Jackson also commended the government’s efforts to maintain fiscal discipline and rationalise expenditure.
He acknowledged that while the country is not completely out of the crisis, the government deserves credit for its current direction.
“There’s a new regime. So far, this new regime has shown admirable commitment to keeping interest rates low and reducing expenditure. Because of that commitment and these factors, I believe it’s time to reintroduce medium-term bonds and start rebuilding trust that the storm may be passing,” he stated.
The finance expert cautioned, however, that while progress is being made, continued vigilance is necessary.
“We are not out of the woods yet. We can’t afford to give the government our blind trust. The events of the past three years have shown that no investment is risk-free, not even in government instruments.
“So yes, we can return to investing in local government bonds, but we must do so with our eyes open—watching inflation, monitoring the government’s commitment to reducing expenditure, and observing efforts to keep the cedi stable. If the government stays on this path, there is no reason we shouldn’t begin investing in local bonds again,” Jackson concluded.
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SSD/MA