HomeFinanceGhana at excessive threat of debt misery, finance minister says

Ghana at excessive threat of debt misery, finance minister says

  • Ghana says reached settlement on programme aims with IMF
  • Ghana will implement debt alternate programme
  • Minister outlines measures to chop spending in 2023 finances
  • Ghana 2023 GDP seen slowing to 2.8%

ACCRA, Nov 24 (Reuters) – Ghana will freeze the hiring of public and civil servants and lengthen a moratorium on authorities automobile purchases and non-essential journey with the intention to deal with a spiralling debt disaster, finance minister Ken Ofori-Atta stated on Thursday.

Presenting the West African nation’s 2023 finances in parliament, Ofori-Atta stated Ghana was at excessive threat of debt misery and has agreed on a debt administration technique with the Worldwide Financial Fund (IMF).

Ofori-Atta didn’t provide any cuts to spending on flagship programmes, nevertheless, and detailed a spread of wider infrastructure and social funding.

The minister is negotiating a reduction bundle with the IMF because the cocoa, gold, and oil-producing nation faces its worst financial disaster in a technology.

Funding financial institution Morgan Stanley stated on Thursday that it anticipated Ghana to restructure each its home and exterior debt.

“The present debt sustainability evaluation carried out reveals that Ghana is now thought of to be in excessive threat of debt misery,” Ofori-Atta instructed lawmakers.

“The federal government and the IMF have agreed on programme aims, a preliminary fiscal adjustment path, debt technique and financing required for the programme,” he stated, including he hopes to succeed in a deal “very quickly”.

He stated the depreciation of the cedi was “significantly affecting” Ghana’s potential to handle its public debt, which has elevated to $48.9 billion this yr.

Ghana will implement a debt alternate programme to handle the challenges, he added.

“The excellent news is that each one income measures are in step with what the IMF would have needed,” stated Razia Khan, chief economist for Africa and the Center East at Customary Chartered.

“Now we await particulars of the debt alternate plan. To date – as beneficial as may need been hoped.”


Ofori-Atta outlined various measures that may allow the federal government to chop expenditure and increase income together with a 2.5 proportion level enhance in worth added tax to fifteen%, a freeze on new tax waivers for international firms and a evaluate of tax exemptions totally free zone, mining, oil and gasoline firms.

Regardless of the projected enhance in income, Ofori-Atta stated the fiscal finances would enhance to 7.7% of GDP from 6.6% over the approaching yr.

The federal government can even ban using V8 and V6 engine autos and lengthen a 50% discount on gas allocations and a ban on non-essential journey.

“It has change into much more pressing to mobilise home income particularly in occasions like this when our entry to the worldwide capital market is basically closed,” he stated.

Ghana’s financial development is anticipated to gradual to three.7% in 2022 from 6.7% final yr, and to 2.8% in 2023, he stated.

Ofori-Atta has confronted requires his dismissal from each the ruling celebration and opposition who accuse him of financial mismanagement. Final week he apologised for the nation’s financial hardship however defended himself in opposition to their claims.

Ghana will impose a debt restrict on non-concessional financing amongst different reforms, and can give attention to utilizing financial coverage to manage inflation, which has exceeded 40%, the minister stated.

($1 = 14.0000 Ghanian cedi)

Reporting by Cooper Inveen and Christian Akorlie in Accra; Writing by Nellie Peyton and Bate Felix;
Modifying by James Macharia Chege, Kirsten Donovan

Our Requirements: The Thomson Reuters Belief Rules.

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