Government, has been advised to reconsider its position of not applying for debt relief under the IMF and World Bank backed G20 Debt Service Suspension Initiative (DSSI).
Government’s decision to not participate in the programme according to renowned economist, Professor Eric Osei Assibey, is not the best as taking part in the initiative is the best option for government to cancel some of its debts.
Adding that, the debt service suspension programme will provide government with some fiscal space to undertake critical social and infrastructural projects.
“I think government should rethink it’s stance on the debt suspension initiative, it is something that comes in handy for government to take advantage of and to see to some level of debt relief to reduce fiscal pressures at this time and allow for more expenditure into social programmes and infrastructure. Otherwise, the mounting debts is definitely going to crowd out government’s ability to focus on the critical sectors of the economy especially the infrastructure and social sectors namely education and health,” he stated.
The DSSI is a policy that allows bilateral and multilateral creditors, in a limited period, suspend debt service payments for developing and lower-middle-income countries.
It is also to help countries concentrate their resources on fighting the pandemic and safeguarding the lives and livelihoods of millions of the most vulnerable people.
Presently, about 30 Sub Saharan African nations including Kenya, Ivory Coast, Togo and Ethiopia are on the programme giving them some temporary suspension of debt-service payments owed to their official creditors.
The implementation of the DSSI was complemented by a record disbursement of $19 billion from the World Bank’s IDA from April through December 2020, with a significant share provided on grant terms.
Over this period, the World Bank was the biggest provider of positive net flows to DSSI countries.
Meanwhile, the DSSI instituted by the Group of Twenty (G20) has been further extended to the end of 2021.
The extension of the DSSI initiative was agreed on by the G20, the International Monetary Fund (IMF) and the World Bank at the IMF/World Bank 2021 Spring Meetings held in April this year.
Presently, Ghana’s total debt stock stands at Ghs 304 billion representing 70 percent of Gross Domestic Product (GDP).
