Former Finance Minister, Seth Terkper, has noted that Ghana is already debt-distressed despite the seeming reluctance on the part of the Bretton Woods institutions particularly the World Bank to classify Ghana as a debt-distressed country.
According to Mr Terkper who doubles as the lead partner for tax firm, PFM Tax Africa, Ghana’s debt-to-GDP projection of 76.7 per cent for end-2020 by the IMF and plans by Ghana to issue between $3-$5 billion Eurobond early next year coupled with other loans to be disbursed for government programmes, will result in a higher than 80 per cent of debt-to-GDP ratio making the nation debt-distressed by the first quarter of 2021.
“If you are going to end 2020 with 76.7 per cent as projected by the IMF and if you also look at the financing of the Expenditure in Advance of Appropriation Budget, which the Eurobond alone is between $3-$5 billion excluding domestic market financing and other loans to be disbursed, looking at the spate of projects to be implemented by government and all that, the difference between 76.7 per cent and 80 per cent is 3 per cent. So Ghana will definitely exceed the 80 per cent debt-to-GDP mark in the first quarter of 2021 and at that level, no one should tell the nation that we are debt-distressed,” Mr Terkper told norvanreports in an interview.
Mr Terkper’s comments follows some assertions by the World Bank Country Director, Pierre Laporte, over Ghana not being classified as a debt-distressed country despite the continuous increase in its debt stock.
Mr Terkper’s statements also follow plans by the World Bank to review Ghana’s classification as a high risk debt distress country mid-next year in its debt sustainability assessment exercise.
According to Mr Terkper, the two Bretton Woods institutions should not make Ghana feel complacent about it’s debt issues knowing very well the country is heading for danger with its ever increasing debts.
He has advised both the IMF and World Bank to be candid with managers of the economy and Ghanaians at large, issues pertaining to our debt status as a debt-distressed country.
“We are a country that went to HIPC and have had to be pulled from the brink a couple of times, so definitely we can get back into being debt-distressed,” he noted.
“Ghana is a country that has had 18 IMF programmes, so nothing should shock us as a nation because some of the originators of the IMF programme since the 1980s are still active and in both parties – NPP and NDC – we have people that have managed IMF programmes and we know what it means to go into an IMF programme,” he stated.
Given Ghana’s projected debt-to-GDP to be 76.7 per cent end-2020 and to further surpass the 80 per cent mark in the first quarter of 2021, Mr Terkper posits that Ghana is already a debt-distressed country and it should not take the IMF or World Bank to tell us.
Speaking further, the former Finance Minister advised against taking comfort in ‘good’ economic projections by the Bretton Woods institutions and other foreign financial and data firms such as Fitch Solutions.
“What I want to tell the managers of the economy and at large Ghanaians is that, we should not take comfort in what the IMF, World Bank, Fitch Solutions and the others are telling us, the good economic figures they are showing us. Because how can you as a country be sustainable with a debt-to-GDP close to 80 per cent, at best they are being diplomatic,” he intimated.