In their views, the government must do more if it is to reduce the country’s debt burden going forward.

The comments follow the latest Bank of Ghana report which shows that Ghana’s debt has reached 138.8 billion cedis equivalent to 68.7 percent of GDP, as at November 2017.

This is up by some 1 billion cedis from the 138 billion cedis recorded a month earlier, i.e. October.

Reacting to this, the Head of Economics Department at the University of Ghana, Professor Peter Quartey told Citi Business News the government must channel its borrowing into investment yielding ventures which will pay off eventually by themselves if possible.

“If the funds were invested in productive activities then you will be able to generate the relevant income or revenue and pay your debts. So looking at where we are, you could see that GDP has grown although debt has also grown and we have not been able to reduce debt to GDP ratio but I think it is a step in the right direction except that we need to do more,” he suggested.

For the CEO of the Institute of Chartered Economists Ghana (ICEG), Gideon Amissah, government’s ambitious projects and the cedi’s performance against major trading currencies affected the rising debt levels.

“The government had to go on with projects such as the free SHS, among others. So even though it had a limited fiscal space, it still had to embark on such projects. Secondly, our exchange rates haven’t been so favourable, considering these factors, then one will not be so surprised that we are having our debts at such levels.”

A Deputy Finance Minister, Charles Adu Boahen in April last year justified the government’s debt re-profiling plan.

He argued that the move saved the economy the burden of seeking one billion cedis every week to repay its debts.

But what has been the effectiveness of this plan one year on?

Professor Peter Quartey believes there is still more to be done and here are his reasons.

“In some years past, the greater proportion of our income went into interest payments and that gave government very little space in terms of financing expenditure so if we have been able to do that then I think it is positive except that I expect more from government. Our debt to GDP ratio is still on the high side and it is not on a very sustainable level.”

Mr. Gideon Amissah also argues that the over-concentration on re-profiling the domestic debt could have limited government’s ability to reduce the debt burden as expected.

“To some extent, the re-profiling was good and beneficial however the indenture, conditions and terms in the external debts may not have allowed us to re-profile the external debt but if we could have done that then I am sure the re-profiling could have helped us to some extent”

There are however some fears Ghana could hit the 70% mark soon if efforts are not intensified to reduce the risks.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Economists critique govt’s debt re-profiling plan appeared first on Citi 97.3 FM - Relevant Radio. Always.

[contextly_sidebar id=”iFJTZP5jkILf12Hbg1pbWtO1QBiB83OB”]According to him, the relatively high interests on short term debts estimated over 20 billion cedis, has made it difficult to repay.

The short term instruments which are in 90, 120 and 180 days, Treasury bills also culminate into a weekly repayment amount of between 800 million to 1 billion cedis.

A development Mr. Adu Boahen believes requires pragmatic measures to address.

“Every week we will have to scramble to find a billion cedis to pay off the short term debts or refinance it meaning we will have to get investors to roll over and not all of them would want to roll over,” he said on the Citi Breakfast Show on Tuesday.

At present, Ghana’s total debt comprises of between 38 to 40 percent short term, 30 percent medium term with the rest being long term.

The Deputy Finance Minister also explains that the debt re-profiling has become necessary as government is challenged with a weekly 250 million cedis amount to finance the estimated 12 billion cedis budget deficit anticipated this year.

In his view, the increased obligation on the government translating into 1.25 billion cedis “puts a strain on the debt management and economy to constantly find money to meet expenditure.”

The latest financial and economic data by the Bank of Ghana showed that the country’s debt has hit 29.2 billion dollars or 122.3 billion cedis as at December 2016.

This also represented 72.5 percent of the country’s Gross Domestic Product for the period.

The comments by Charles Adu Boahen come on the back of concerns by some industry watchers that the NPP government is adding unto the country’s debt stock with the 2.25 billion dollars it raised from the four bonds issued last month.

But the government’s economic management team has since justified the plan.

For instance, Vice President and the Head of the economic management team, Dr. Mahamudu Bawumia believes the plan will accelerate plans to maintaining fiscal stability.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Debt profiling to avert weekly GH¢1bn burden – Charles Adu Boahen appeared first on Citi 97.3 FM - Relevant Radio. Always.