An Economis,t Dr. Patrick Asuming, has revealed that the government cannot put aside the debt exchange programme, as a request for a debt cancellation, will not provide the ultimate solution to the country’s economic woes.

According to him, the country’s commercial debts are too huge to make it possible for government to consider debt cancellation as an option to the debt exchange programme. He indicated that a debt cancellation has a limit to which it can solve the country’s economic challenges due to the chunk of commercial debt.

“We have to understand that a chunk of our debt is commercial. So, it’s easy to appeal to other governments and also multilateral partners for that kind of forgiveness. But I am not sure that it is feasible to ask what we have borrowed from the international capital market to get that kind of forgiveness.

In a sense, we can see that option has been explored, but there is a limit to how much that can solve our problem because a huge chunk of our debts is commercial debt. We cannot turn to that and say we could just put aside the domestic debt exchange and go for that (debt cancellation).”
Dr Patrick Asuming

Elaborating on other alternatives to help boost the economy, Dr Asuming stated that “the obvious ones are there”. He explained that the cutting down in the numbers of ministerial appointees remains an option.

“I still think there is room in addition to cutting the Ministers. We have to think about consolidating some of the government agencies. In addition, we also have to review the efficiency of government spending.”
Dr Patrick Asuming

Meanwhile, Finance Minister, Ken Ofori-Atta, has revealed that government is committed to building local resilience and capacity in the country.

According to him, the move is geared towards preventing future economic crisis. He indicated that the country had been left exposed following the depletion of its buffers to tackle the Covid-19 pandemic, thus making it vulnerable to the ripple effect of the Russia-Ukraine war.

Building a resilient economy

Mr Ofori-Atta noted that the government in an effort to prevent such a crisis from recurring will be heavily investing in agriculture to break the country’s reliance on food imports among others.

“… So how do you manage that in a way in which we will know the direction we are going? We get the support from the international community, but the same time, we have to build local resilience and capacity. And that’s why the issue of farming, industries are going to be key in this period of time so that we build a country that has more buffers than it has had in the past.”
Ken Ofori-Atta

Mr Ofori-Atta stated that engagements are ongoing to introduce structural reforms in the country’s economic frame to support the local capacity building project.

“I think the issue of certain structural reforms which we are discussing with a lot of people are really also what is expected of this government and some hard decisions include a debt exchange etc. And we’ll look at the ministries, what are we going to do about these flagship programmes? All of those are critical components of this journey that we have embarked on. And we will be successful.”
Ken Ofori-Atta

The finance minister however hinted that the deadline for the domestic debt exchange programme will not be extended further than the latest January 31 date. He highlighted that he is confident the government will garner the required 80% subscription it is seeking to implement the policy right in time for the International Monetary Fund executive approval.

Mr Ofori-Atta emphasized that the government is currently working on a very tight schedule to facilitate the injection of much needed foreign exchange into the economy through the IMF deal. As such, any further delays, would be detrimental to the economy and the Ghanaian fiscal space in general.

“I’m confident that we’ll get there. You know we have done the staff level agreement as you know, we met with the Paris Club membership and we have given them till end of February for us to go through what we call the common framework or some version of it but that will be facilitated, and then we expect them to go to board in Washington in March.”
Ken Ofori-Atta