Prof Gatsi expresses cautions optimism on clinching debt deal with external creditors by end of next week
Professor John Gatsi, Dean of the School of Business at the University of Cape Coast (UCC), has shed light on the ongoing negotiations with external creditors. According to Professor Gatsi, the Finance Minister’s recent disclosure, signaling a departure from the initially anticipated 20 to 40 percent cuts on external debts, means the negotiation scope has broadened, potentially bringing Ghana closer to aligning with the interests of external creditors.
In a recent interview with CNBC Africa, Professor Gatsi expressed cautious optimism regarding the upcoming week’s prospects for clinching a deal, underlining the nation’s collective anticipation for the receipt of the next $600 million tranche. This injection of funds is seen as critical in shoring up Ghana’s fiscal indicators and fostering an economic environment conducive to production and robust economic activities.
“What that means is that they have lowered the bar. Now the negotiation would be within a wider spectrum for consideration. So with that, I think they are getting closer to the interests of the external creditors. So, one only hope that that comes to fruition by next week as pronounced by the finance minister,” he said.
Despite the Finance Minister’s pronouncements, Professor Gatsi underscored a prevailing skepticism within the country regarding the reliability of such announcements. Past instances of unfulfilled promises have instilled a sense of pragmatism among the populace, with many adopting a “wait-and-see” approach. However, the professor emphasized the indispensability of the International Monetary Fund (IMF) agreement, asserting that timely financing is imperative for translating policy positions into tangible outcomes.
“The reality is that we have signed on to the IMF agreement, so that they will prop up our policy position and help us to implement, that is the reason why they do review and the second aspect is that they provide financing for our economy. So we cannot be implementing the policy side when the financing is not coming. Therefore, it is very important and critical for the financing to come timely for the purpose of which the financing have been arranged. We need that money now. Before we get into the second year of the IMF engagement,” he quipped.
The economic landscape, as described by Professor Gatsi, appears fraught with challenges. The delayed arrival of expected funds, including the syndicated loan, has contributed to an environment where risk indicators loom large, potentially dissuading investor confidence. Professor Gatsi aptly characterized the current state of the Ghanaian economy as “injured,” further noting the concerns emanating from the business community.
Notably, Professor Gatsi articulated concerns regarding the government’s reliance on domestic revenue mobilization. While acknowledging the necessity of such measures, he cautioned against having too many taxes, pointing to the palpable discomfort within the business community in response to perceived pressures from tax authorities. Urging a reconsideration of the approach to domestic revenue mobilization in 2024, Professor Gatsi emphasized that, irrespective of the challenges, adherence to the IMF agreement remains paramount for both policy and financial benefits.
“But the point is that we cannot leave the IMF money because that was the reason why we went for the engagement. So it is engagement for the policy benefits and the financial benefits. So no matter what the case is, we need to work assiduously to ensure that the money is released on time,” he added.
Professor Gatsi’s insights illuminate the delicate balance Ghana must strike in navigating economic challenges and ensuring the timely release of crucial IMF funds. As the nation stands at a pivotal juncture, the financial community keenly observes the unfolding developments, cognizant of the broader implications for Ghana’s economic trajectory.
