The recent agreement to restructure Ghana’s $5.4 billion debts owed to external creditors has been hailed as a significant step towards economic recovery and growth by leading economists. According to Professor Peter Quartey, Director of the Institute of Statistical, Social and Economic Research, and Dr. Said Boakye, Head of Research at the Institute of Fiscal Studies, this agreement will free up crucial resources for the government to invest in activities that will drive economic growth.
Economists' Analysis
One of the immediate benefits highlighted by the economists is the unlocking of the second tranche of $600 million from the International Monetary Fund (IMF) and funding from other development partners. This injection of funds will not only support critical public investments in healthcare, education, and infrastructure development but also help in managing exchange rate stability and cushioning the local currency.
Agreement Details
The Ministry of Finance announced that this agreement follows the successful completion of the Domestic Debt Exchange Programme (DDEP) in 2023, which saw the country swap domestic bonds for new bonds at reduced coupon rates and longer tenors. This development is expected to pave the way for the IMF Executive Board to approve the first review of the Fund-supported program, allowing for the next tranche of IMF financing of US$600 million to be disbursed.
Future Implications
Furthermore, the World Bank is expected to provide support to the Ghana Financial Stability Fund with $250 million to address the impact of the DDEP on the financial sector. The terms of the agreed debt treatment are expected to be formalized in a Memorandum of Understanding between Ghana and Official Creditors, with further engagement to ensure prompt implementation of the agreed terms.
Expert Insights
While emphasizing the positive impact of these developments, Professor Quartey cautioned that it was crucial for Ghana to use these resources judiciously and avoid repeating past mistakes. He stressed the importance of investing these resources to stimulate production and ensure that there are enough resources to service the debts when they are due for repayment.
Dr. Boakye also underscored the significance of these funds in successfully implementing the budget and managing exchange rate risks, particularly in stabilizing the local currency.
The agreement has received commendation from the Managing Director of the IMF, Kristalina Georgieva, who stated that it is consistent with the objectives of the IMF-supported program aimed at restoring macroeconomic stability and debt sustainability while laying the foundations for stronger and more inclusive growth.
In summary, while these developments hold promise for Ghana’s economic recovery and growth, it is imperative for the government to exercise prudence in utilizing these resources and to learn from past mistakes. With careful management and strategic investment, Ghana can leverage these funds to propel sustainable economic growth and development.
(This article is sourced from graphic.com.gh curated by Hilda Asante | Mydailyreports24)
0 Comments