Government would have to step up efforts in dealing with the country’s debt levels, the International Monetary Fund (IMF) has indicated.
Ghana’s debt as at the end of 2016 was 122 billion cedis, which as a percentage of GDP is 74 percent, up from the 67.4 percent or 112 billion cedis recorded in the third quarter of that same year.
Vice President Dr. Mahamudu Bawumia earlier announced that government had begun processes aimed at reducing Ghana’s public debt stock and the recent 2.25 billion dollar bonds issue was part of its debt management plan.
According to Dr Bawumia, the bond transaction enabled Ghana to re-profile its debt, to enable government replace more expensive debts with less expensive ones.
The IMF believes government’s immediate priority in dealing with the debt situation is to ensure fiscal discipline and target a budget deficit which is sufficient to push the country’s debt levels down.
Speaking to the Head of Citi Business News Desk, Vivian Kai Lokko at the ongoing IMF/ World Bank Spring Meetings in Washington, the Assistant Director of the Fiscal Affairs Department of the IMF, Catherine Pattillo said despite the budget targeting moves to push debt levels down, more is needed to be done.
“The immediate priority in Ghana is to ensure fiscal discipline and target a budget deficit that is sufficient to put debt on a declining path and this is in response to the fiscal slippages in 2016 and the unverified claims that it arose that are in the process now but being verified,”
“So the 2017 budget targets a significant fiscal correction and we welcome that, there is a need to do more and so additional measures are being discussed so the steps are promising and more is needed,” Catherine Pattillo observed.
She further noted, “There are of course deep seated challenges not just with the central government but the broader public sector including state owned enterprises in the utility sector so these as well as public financial management reforms , tax reforms are all needed to put debt on a declining path.”
By: Vivian Kai Lokko/citibusinessnews.com/ Washington, US