Finance Minister Ken Ofori-Atta has admitted that is a lot of work to do to resolve the economic challenges despite the signs of improvement following the approval of the deal by the Fund.
He called on all Ghanaians to remain focused and support the government in dealing with the challenges.
Speaking to journalists on the sidelines of an event to mark the 147th Independence Day anniversary of the United States of America (USA) in Accra on Tuesday, July 4, Mr Ofori-Atta said “We recognize that it has been quite a dramatic change to where we are, during that period in which we did the double take to go to the Fund, we got the Staff Level Agreement (SLA) in record time, we got the Fund approval in record time, we got three times our quota which is unprecedented, we also were able to front load it so that we may get $1.2bn this year, which is good, within three days of the approval also it was disbursed to us. Inflation has tapered down from 54 % to where we are.
“I think the currency is a lot more stable, Treasury Bill rates have
moved from 35 to 20 something percent. The domestic Debt exchange
programme was very difficult for us as a country but I think the need to
do it and improve it. So you can see some stability and we are grateful
for that. There is a lot of work ahead and really we need to remain
focused as Ghanaians and move ahead.”
Regarding measures to tackle the economic challenges, especially debts, the government of Ghana has been told to take drastic measures to curtail rising domestic debt otherwise, the country will soon go through another round of debt restructuring just as what happened before the 3Billion International Monetary Fund (IMF) deal was approved.
This caution which was given by the Chief Operations Officer at Dalex Finance Mr Joe Jackson was the heels of the warning Fich gave to Ghana against the rising interest cost on domestic debt despite securing the $3billion deal from the Fund.
According to Fitch, rising interest cost on domestic debt does not help with the overall debt sustainability in the medium term.
Speaking at a webinar on Africa Sovereigns Amid Financing Crunch, Senior Director for Emerging Markets, Toby Iles, cautioned Ghana and other African governments against the rising interest costs on domestic markets.
“As I mentioned right at the beginning, there has been more development in the domestic debt market and so it’s become more important. When we look at things in terms of interest cost of the government; break them down by domestic debt interest cost and compare them with external interest cost, the share of interest cost on domestic debt has been going up. So domestic debt becomes more of a question mark,” he said.
“Terms of the actual restructuring: it definitely helps in terms of liquidity but it doesn’t help in the overall debt sustainability over the medium term. It presupposes there will also be other fundamental improvements in fiscal consolidation,” he added.
Reacting to this development, Mr Joe Jackson who is also a Financial Analyst asked the government to downsize as a way of reducing cost.
Failure to cut down the size of appointees, he said, would amount to ‘robbing Peter to pay Paul’ in the management of the domestic debt situation.
Interest rates on Treasury bills (T-bills) have been going up after falling drastically to about 18 percent in March 2023 from 35 per cent, raising concerns about a probable restructuring of the short-term securities.
Speaking on the Business Focus with Paa Kwasi Asare on TV3 Monday, July 3, Mr Jacskon said “has the government actually cut costs? The IMF deal has been signed, we are all waiting for the day for the budget review whether we are still going to borrow but ultimately the government has to cut costs far more than it has done today.
“We have heard the Finance Minister say that over 20 percent of all our borrowings is a result of State-Owned Enteprises (SOEs) but can’t we cut down the size of SOEs, why can’t you cut the size of appointees otherwise we are just robbing Peter to Pay Paul.”
He added “If we don’t pull the brake we will soon have to restructure our debts again, we cannot sustain interest rates at this level for any less time. If we don’t fix it, somewhere we are going to come back and restructure some of the debts again.”
0 Comments