The Director of the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana, Prof. Peter Quartey, is concerned that Ghana’s debt levels may threaten discussions for an International Monetary Fund (IMF) support program.
Prof. Quartey acknowledged that the IMF has various support schemes from which the country could benefit, but he is bothered that the country’s unsustainable debt levels could be a challenge.
“For IMF, they require that you have a sustainable debt level or a medium-term plan to ensure that your debt levels become sustainable. They have sounded this warning, but Ghana’s debt sustainability threshold is not good.”
“We are at risk of debt distress as anything above 60 per cent raises a red flag. Currently, we have hit the threshold, so going in for borrowing will be tough for us,” he said on Citi FM on September 26.
The Ministry of Finance confirmed on September 26 that its officials and of the Bank of Ghana (BoG) had commenced a comprehensive debt sustainability analysis with the IMF for a $3 billion support programme.
A statement from the ministry said: “the Government of Ghana is putting together a comprehensive post-Covid-19 economic programme which will form the basis for the IMF negotiations.”
“The programme seeks to establish a macro-fiscal path that ensures debt sustainability and macroeconomic stability, underpinned by key structural reforms and social protection.”
The ministry added that it was “optimistic about making progress in our discussions.”
“Government remains committed and shall continue to actively engage all stakeholders, both public and private, in a clear and transparent manner as we seek to fast-track this process.”
The IMF staff team is in Ghana until October 7 to continue discussions with the government on policies and reforms that could be supported by a lending arrangement.
IMF staff will also further engage with other stakeholders during the visit.
The IMF team is led by Stéphane Roudet, the Mission Chief for Ghana.
The last IMF mission to Ghana was between July 6 and July 13, 2022, to assess the economic situation and discuss the broad lines of the government’s Enhanced Domestic Program that could be supported by an IMF lending arrangement.
The IMF team met with Vice President Bawumia, Finance Minister Ofori-Atta, and the Governor of the Bank of Ghana.
The team also met with the Parliament’s Finance Committee, civil society organizations, and development partners, including UNICEF and the World Bank, to engage in social spending.