Ghana’s True Economic Picture To Show When Gov’t Resumes Debt Servicing – Prof. Lord Mensah

Ghana’s True Economic Picture To Show When Gov’t Resumes Debt Servicing – Prof. Lord Mensah

Associate Professor of Finance at the University of Ghana Business School (UGBS), Professor Lord Mensah, has averred that the true picture of Ghana’s macroeconomic performance will show when the country resumes the payment of its principal debts and interests.

According to Prof Lord Mensah, the seemingly good performance of the Ghanaian economy is on the back of the suspension of debt and interest payments, the ongoing IMF programme, and the successful conclusion of both the domestic and external debt restructuring.

Per recent reports, the Government of Ghana would require between $600 million and $800 million for external debt service in 2024.

Out of this, an estimated $477 million would be used for Eurobond debt service.

“The true economic picture of Ghana will start showing when we start to service our debts, that is where we will get to see the true performance of the macroeconomic indicators. When we start servicing our debts, we will then know the real cedi-dollar exchange rate,” he quipped.

The International Monetary Fund (IMF) has revised Ghana’s growth rate forecast from 2.8% to 3.1% by the end of 2024.

This positive adjustment is attributed to the reforms Ghana is implementing under the IMF programme, which are significantly aiding its economic recovery.

Making the assertion during the NorvanReports & BudgIT Ghana X Space Discussion on Sunday, July 14, on the topic, “Restoring Ghana’s Macroeconomic Stability After A Difficult Debt Restructuring,” noted that we shouldn’t jubilate so much over the supposed savings made from the external debt restructuring as they are not real savings.

“The completion of the debt restructuring is just a signal that we can do well as an economy, and we shouldn’t jubilate so much about it. Because the $8bn savings are not realised amounts,” he posited.

Speaking further during the X Space Discussion, Prof Mensah noted that the Government should not rush to go back to the international market as the country will have to pay higher rates on the monies it borrows, which will be beneficial to foreign creditors.

Rather, the country should take its time to significantly improve the economy, so it can borrow at cheaper rates when it goes back to the international market.

“We shouldn’t struggle or force ourselves to go to the international market now. If we put up the right economic structures and ensure that we have the ability to pay the money we borrow, then the funds will come to us at lower costs.

“But when we go back to the market in our current state or when we haven’t substantially improved the economy, then we will be making the foreign creditors happy because they will benefit from the higher rates on the loans, they will cash out on us,” he remarked.

“So for now, the international market shouldn’t be our target especially when we have suspended our interest payments. So we should work hard to let the funds chase us rather than we chasing the funds,” he added.