Economic challenges: Govt accepted blame by admitting debt is unsustainable – Alfred Thompson

Former Deputy Managing Director of the National Investment Bank, Alfred Thompson has indicated that the government has accepted blame for the challenges facing the country by admitting that the debt levels are unsustainable.

His comment was after host of the Big Issue on TV3 Berla Mundi asked him on Tuesday December 6 whether the government takes responsibility for the challenges that have resulted in the launch of the Debt Exchange programme.

“…If I tell you our debt is unsustainable, it means I have taken blame,” the member of the communications team of the governing New Patriotic Party (NPP) said.

The Finance Minister Ken Ofori-Atta during the launch of the debt exchange programme indicated that the Debt Sustainability Analysis (DSA) demonstrated unequivocally that Ghana’s public debt is unsustainable.

He said the that the government may not be able to fully service its debt down the road if no action is taken.

Indeed, he said, debt servicing is now absorbing more than half of total government revenues and almost 70% of tax revenues, while our total public debt stock, including that of State-Owned Enterprises and all, exceeds 100% of our GDP. This is why we are today announcing the debt exchange which will help in restoring our capacity to service debt.

“This is the path towards resetting the economy to a more stable one capable of
addressing the development challenges of the country,” he said while launching the Debt Exchange programme.

The reasons are quite clear. Covid-19 pandemic, rising global food prices, rising crude oil & energy prices; and the Russia-Ukraine war adversely affected Ghana’s macroeconomy, with spillovers to the financial sector. The combination of adverse external shocks have exposed Ghana to a surge in inflation, a large exchange rate depreciation and stress on the financing of the budget, which taken together have put our public debt on an unsustainable
path.

To address the ongoing economic crisis, the Government has requested financial support from the International Monetary Fund, he said.

“We expect to reach a Staff-Level Agreement soon on an IMF programme aimed at restoring macroeconomic stability and protecting the most vulnerable.

“To this end, as a Government, we are determined to implement wide-ranging
structural and fiscal reforms to restore fiscal and debt sustainability and support growth,” the Finance Minister stressed.

Source: 3news