Ghana: IMF programme likely to lead to debt forgiveness – Seth Terkper
Erstwhile Minister for Finance, Seth Terkper, has said Ghana is likely to benefit from debt relief in the form of partial or total debt forgiveness under the IMF.
This, he noted, is based on the programme the government is seeking from the Fund.
Adding that, the programme is also likely to tackle government’s revenue and expenditure given the growing debt situation.
According to the Ministry of Finance, the Government 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.
“I think this is the 17th programme, I think it will be a mixture of a programme in the context of heavily indebted poor countries [HIPC] when you had a lot of debt reliefs, it could be that.
“It could also be the recent one which the NDC started and the NPP concluded with serious homegrown elements like Sinking Fund, Stabilization Fund and others which we thought should become an element of our fiscal framework. Remember we are talking about debt.
“I keep reminding people that debt is the product of revenue minus expenditure, deficit and borrowing and when you don’t repay then the debt keeps increasing. So this programme will also tackle revenue, it will tackle expenditure,” he remarked speaking on the Ghana Tonight show on TV3.
Debt restructuring dependent on outcome of DSA report – IMF
In a related development, Director of Communications at the International Monetary Fund (IMF), Gerry Rice, has cooled speculations that Ghana is poised to start talks on restructuring its debt as part of plans to secure a $3 billion loan from the Fund.
Speaking at a news conference in Washington DC, Mr Rice said the restructuring of Ghana’s debt will be dependent on the outcome of the Fund’s Debt Sustainability Analysis (DSA) Report.
According to him, the DSA report will indicate if there is the 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.
“When a country requests financing from the IMF, we assess whether the country’s policies are consistent with debt sustainability as one of our requirements. We still need to conduct a thorough update of the debt situation in Ghana through our Debt Sustainability Analysis.
“The last, I don’t know if it’s useful, I have here the last DSA, Debt Sustainability Analysis. We published this as part of the 2021 Article IV Staff Report with Ghana. It said public debt was a sustainable conditional on a rigorous and credible implementation of the authority’s medium term consolidation plan to put debt on a declining trajectory and ensure continued market access,” he said.
Adding that, this will inform the next line of action as government and the Fund remain committed to ensuring no harm is done to the interest of stakeholders as a result of this programme.
