An economist with C.K Tedem University of Technology and Applied Sciences (CKT-UTAS), Bismarck Osei has indicated that the next government to inherit the economy from the Nana Akufo Addo NPP-led administration will have huge challenges financing most of its projects.
The government may also suffer to keep the economy afloat. This is because of the ballooning size of the national debt stock.
According to him most of the loans contracted by this government will be maturing at the time the Nana Addo will be handing over the government. Since the next government will have no option but to service those loans, things could become extremely difficult for the next government.
Mr Osei’s comment came after international banks pledged to lend Ghana $1 billion for budget purposes and to boost the Central Bank reserves as the country seeks to cut its fiscal deficit and stabilise the cedi.
Speaking on the Day Break Upper East show, Mr. Osei said, it is good to stabilize the system in the medium term but those decisions pose serious long-term effects on the county’s economy.
He said ” it is adding to our debt stock. Is it going into economically viable projects that will help us to pay back the loan? It is good to stabilize the system, but in the long term, it’s going to have some monstrous effect on us since we have to pay it back. These are very key issues the next government that will be coming will be confronted with. Most of the loans this government contracts are long term and the next government will have a serious obnoxious situation to deal with.”
Background
International banks have pledged to lend Ghana $1 billion for budget purposes and to boost the Central Bank reserves as the country seeks to cut its fiscal deficit and stabilise the cedi.
The country raised $750 million through syndicated loans with the participation of about eight African and European banks and $250 million from multilateral lenders, according to two people familiar with the transaction, who didn’t want to be identified because the deal is not yet public. Standard Bank Group Limited, Standard Chartered Plc and Rand Merchant Bank Limited led the arrangements.
The country, which aims to cut its budget shortfall to 7.4% of gross domestic product in 2022, from an estimated 12.1% of GDP, will dedicate $750 million of the syndicated loans to the budget, for expenses and liability management, the people said.
The rest will go to the Bank of Ghana to beef up its resources for swap deals, they said.
Ghana’s debt ratio rose to 78% of GDP at the end of March, from 66.3% of GDP a year before. The cedi lost 22% against the dollar this year, compared with 1% appreciation for the same period a year ago.
Source: A1radioonline.com|101.1 MHz|Samuel Adagom|Bolgatanga|Ghana
