David Aidoo writes…
Public debt to gross domestic ratio increased from 54.7% (2017) to 61.2% in (2019), 74.4%(2020) and increased further to 76.6%(2021) reflecting some key events in the period.
i Impact of covid-19 spending interventions leading to a budget deficit of 15.6% in 2020.
ii. Banking sector clean up at the cost of GHS25BN since 2018.
iii.Energy sector IPP’s payments GHS16BN and counting.
iv. Cedi depreciation and provisional data indicates that public debt stood at GHS378.9BN(77.2% of GDP) as at the of April, 2022 up from GHS 328.04 BN(71.5%) of GDP recorded in April, 2021 driven largely by the impact of the exchange rate depreciation.
The question is will the IMF solve the rising problem of inflation.
i. The design of the program will address inflation through strong and credible fiscal adjustments and reduce the penchant for borrowing.
The facility will be a concessional loan with the following likely terms of 0% interest rate.
Coupled with a moratorium on repayment up to five years and repayment period of twenty years.
Even if Ghana is to go for a non-concessional loan facility from the fund.
The terms of the loan will be considerably better than loans contracted from the bond market.
Ghana’s exposure to the IMF is SDR 1,347.69 M as at March 31,2022 and a new facility will add on to the existing debt but this is cheaper than commercial loans.
Ghana in 2019 could complete the 2015 IMF program because it failed to achieve the structural targets and there was waivers on symptomatic issues in addition to government relying on unrealistic hopes.
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