Ofori-Atta must ask IMF and World Bank for debt relief on existing loans – Economist

Ofori-Atta must ask IMF and World Bank for debt relief on existing loans – Economist

A finance expert and an associate professor with Andrews University in Michigan, USA, Prof Williams Kwasi Peprah has said the Finance Minister, Ken Ofori-Atta must ask the Bretton Woods institutions for debt relief on existing loans.

He said the move will automatically help to manage and reduce the country’s ballooning national debt. 

Speaking on the Asaase Breakfast Show on Friday, October 14, Prof Peprah said, “If I were the Finance Minister [Ken Ofori-Atta] even putting my plans [together], my number one strategy that will be on that plan is asking IMF and World Bank to give me debt relief on the loans that they have given to me and then I’ll now talk about the [new] US$3 billion loan.

“Because if IMF gives us the debt relief, it frees us space; it means that we are not going to pay and straight away our debt will reduce because we’ll write it off our books,” he said.

The government began discussions with the Washington-based multilateral lender last July, reversing a pledge by President Nana Akufo-Addo’s administration not to seek a financial programme from the IMF.

Ghana has been battling to stabilise a debt pile that increased to 78.3% of gross domestic product at the end of June from 62.5% five years ago.

It’s too early

However, the International Monetary Fund (IMF) has cooled speculation that Ghana is poised to start talks on restructuring its debt under plans to secure a US$3 billion loan from the Fund.

According to the Bretton Woods institution, the restructuring of Ghana’s debt will depend on the outcome of an IMF debt sustainability analysis (DSA) report.

The IMF director of communications, Gerry Rice, who disclosed this at a news conference in Washington, DC, said the DSA report will show if there is a need for debt restructuring in the first place and, if necessary, how it should be carried out, as well as which areas will be affected.