Sunday, November 27, 2022

Ghana at excessive threat of debt misery, finance minister says

Must read

  • Ghana says reached settlement on programme goals with IMF
  • Ghana will implement debt change programme
  • Minister outlines measures to chop spending in 2023 finances
  • Ghana 2023 GDP seen slowing to 2.8%

ACCRA, Nov 24 (Reuters) – Ghana will freeze the hiring of public and civil servants and lengthen a moratorium on authorities automotive purchases and non-essential journey with a purpose to deal with a spiralling debt disaster, finance minister Ken Ofori-Atta mentioned on Thursday.

Presenting the West African nation’s 2023 finances in parliament, Ofori-Atta mentioned Ghana was at excessive threat of debt misery and has agreed on a debt administration technique with the Worldwide Financial Fund (IMF).

Ofori-Atta didn’t supply any cuts to spending on flagship programmes, nonetheless, and detailed a spread of wider infrastructure and social funding.

The minister is negotiating a reduction package deal with the IMF because the cocoa, gold, and oil-producing nation faces its worst financial disaster in a technology.

Funding financial institution Morgan Stanley mentioned on Thursday that it anticipated Ghana to restructure each its home and exterior debt.

“The present debt sustainability evaluation carried out reveals that Ghana is now thought-about to be in excessive threat of debt misery,” Ofori-Atta advised lawmakers.

“The federal government and the IMF have agreed on programme goals, a preliminary fiscal adjustment path, debt technique and financing required for the programme,” he mentioned, including he hopes to succeed in a deal “very quickly”.

He mentioned the depreciation of the cedi was “critically affecting” Ghana’s potential to handle its public debt, which has elevated to $48.9 billion this yr.

Ghana will implement a debt change programme to handle the challenges, he added.

“The excellent news is that each one income measures are in step with what the IMF would have needed,” mentioned Razia Khan, chief economist for Africa and the Center East at Customary Chartered.

“Now we await particulars of the debt change plan. Thus far – as beneficial as may need been hoped.”


Ofori-Atta outlined a variety of measures that may allow the federal government to chop expenditure and enhance income together with a 2.5 proportion level improve in worth added tax to fifteen%, a freeze on new tax waivers for international firms and a evaluate of tax exemptions without spending a dime zone, mining, oil and gasoline firms.

Regardless of the projected improve in income, Ofori-Atta mentioned the fiscal finances would improve to 7.7% of GDP from 6.6% over the approaching yr.

The federal government will even ban the usage of V8 and V6 engine automobiles and lengthen a 50% discount on gasoline allocations and a ban on non-essential journey.

“It has turn into much more pressing to mobilise home income particularly in occasions like this when our entry to the worldwide capital market is essentially closed,” he mentioned.

Ghana’s financial development is predicted to gradual to three.7% in 2022 from 6.7% final yr, and to 2.8% in 2023, he mentioned.

Ofori-Atta has confronted requires his dismissal from each the ruling get together and opposition who accuse him of financial mismanagement. Final week he apologised for the nation’s financial hardship however defended himself in opposition to their claims.

Ghana will impose a debt restrict on non-concessional financing amongst different reforms, and can concentrate on utilizing financial coverage to manage inflation, which has exceeded 40%, the minister mentioned.

($1 = 14.0000 Ghanian cedi)

Reporting by Cooper Inveen and Christian Akorlie in Accra; Writing by Nellie Peyton and Bate Felix;
Modifying by James Macharia Chege, Kirsten Donovan

Our Requirements: The Thomson Reuters Belief Ideas.

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