Gov’t Adopts Debt Exchange Programme For Debt Sustainability
The government of Ghana has announced the adoption of a Debt Exchange Programme after analysis found that Ghana is at high risk of debt distress.
Finance Minister Ken Ofori Atta says the country’s debt was worsened by the “negative impact of exchange rate depreciation, particularly on external debt, as well as the crystallisation of significant contingent liabilities in recent years”.
The cedi reportedly depreciated 54.2 per cent against the US Dollar and by 48.5 per cent against the British Pound.
The country’s debt as of the end of September 2022 stood at GH¢467,371.31 million (US$48,871.34 million) according to provisional results.
Reading the 2023 Budget Statement and Economic Policy, Ofori Atta assured that the government was nevertheless bent on bringing debt to sustainable levels over the medium to long term.
“To this end, we will implement a debt exchange programme to address the challenges identified in the portfolio in collaboration with all relevant stakeholders including the Ghanaian public, the investor community and development partners.”
As part of measures for macro-economic stability, the government says it will aggressively mobilise domestic revenue; streamline and rationalise expenditures; Boost local productive capacity; Promote and diversify exports; Protect the poor and vulnerable; Expand digital and climate-responsive physical infrastructure; and Implement structural and public sector reforms.
For Mobilisation Of Domestic Revenue the government will increase the VAT rate by 2.5 per cent; Fast-track the implementation of the Unified Property Rate Platform programme in 2023; and review the E-Levy Act and more specifically, reduce the headline rate from 1.5% to one per cent (1%) of the transaction value as well as the removal of the daily threshold.
Aside from the Debt Exchange Programme, he said, the Government will strengthen its oversight of all State-ownmed-Enterprises, in particular, financial and energy sectors to ensure reforms and discipline to reduce potential fiscal risks from incidence of contingent liabilities.
Furthermore, he said the government will opt for concessional loans.
“Mr. Speaker, in line with our objective to restore debt sustainability, concessional loans will continue to be the preferred financing option for projects. We, however, recognize that there may be cases where non-concessional borrowing may be required to finance critical transformative projects. Such financing will be determined within limits that are consistent with our debt sustainability programme.”
Based on the estimates for Total Revenue and Grants and Total Expenditure (including arrears clearance), the overall Budget balance to be financed in 2023 is a fiscal deficit of GH¢61,475 million, equivalent to 7.7 percent of GDP. The corresponding Primary balance is a deficit of GH¢8,925 million, equivalent to 1.1 percent of GDP.
Source: opemsuo.com/Hajara Fuseini
