Ghana at excessive threat of debt misery, finance minister says By Reuters

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© Reuters. FILE PHOTO: Police personnel information protesters as they march within the streets to reveal towards worsening financial disaster and to name on the president to step down, in Accra, Ghana November 5, 2022. REUTERS/Francis Kokoroko/File Picture

By Christian Akorlie and Cooper Inveen

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

Presenting the West African nation’s 2023 price range 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 supply any cuts to spending on flagship programmes, nonetheless, and detailed a spread of wider infrastructure and social funding.

The minister is negotiating a aid 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 (NYSE:) stated on Thursday that it anticipated Ghana to restructure each its home and exterior debt.

“The present debt sustainability evaluation performed reveals that Ghana is now thought-about to be in excessive threat of debt misery,” Ofori-Atta informed 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 achieve a deal “very quickly”.

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

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

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

“Now we await particulars of the debt change plan. To this point – as beneficial as might need been hoped.”


Ofori-Atta outlined a lot of measures that may allow the federal government to chop expenditure and enhance income together with a 2.5 proportion level improve in worth added tax to fifteen%, a freeze on new tax waivers for international firms and a assessment of tax exemptions at no cost zone, mining, oil and gasoline firms.

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

The federal government will even ban using V8 and V6 engine automobiles and prolong a 50% discount on gasoline allocations and a ban on non-essential journey.

“It has grow to be 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 predicted to sluggish 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 get together and opposition who accuse him of financial mismanagement. Final week he apologised for the nation’s financial hardship however defended himself towards their claims.

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

($1 = 14.0000 Ghanian cedi)

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