Minister Kenneth Ofori-Atta says depreciation of the cedi ‘critically affecting’ Ghana’s potential to handle its public debt.
Ghana is at excessive danger of debt misery and has agreed on a debt administration technique with the Worldwide Financial Fund (IMF), finance minister Kenneth Ofori-Atta stated on Thursday.
Ofori-Atta is in the midst of negotiating a reduction package deal with the IMF because the West African nation faces its worst financial disaster in a era.
“The present debt sustainability evaluation performed reveals that Ghana is now thought-about to be in excessive danger of debt misery,” the minister informed lawmakers throughout his presentation of the 2023 funds.
“Authorities and the IMF have agreed on programme goals, a preliminary fiscal adjustment path, debt technique and financing required for the programme,” he stated, including he hopes to achieve a deal “very quickly”.
The depreciation of the Ghanaian cedi was “critically affecting” the nation’s potential to handle its public debt, which has elevated to $48.9bn this 12 months, he informed parliamentarians, saying the forex has misplaced greater than 50 p.c of its worth.
“Our inventory of debt has elevated by 93 billion Ghana cedis ($7bn) this 12 months alone as a result of depreciation of the cedi for the reason that starting of 2022.”
Ghana will implement a debt trade programme to deal with the challenges, he stated.
Financial progress is anticipated to sluggish to three.7 p.c of gross home product (GDP) in 2022 from 6.7 p.c final 12 months, and to sluggish additional to 2.eight p.c in 2023, he stated.
Ofori-Atta has confronted requires dismissal from each the governing get together 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.
“I acknowledge our financial system is dealing with difficulties and the folks of Ghana are enduring hardships,” he stated final Friday. “Because the individual President Akufo-Addo has put accountable for this financial system, I really feel the ache personally, professionally, and in my soul.”
On Thursday, Ofori-Atta stated Ghana would impose a debt restrict on non-concessional financing amongst different reforms, and can concentrate on utilizing financial coverage to regulate inflation, which has exceeded 40 p.c.
The federal government will freeze new tax waivers for international firms and evaluate tax exemptions for mining, oil and gasoline firms. It’s going to additionally freeze hiring for civil and public servants, he stated.
Nevertheless, Ofori-Atta didn’t provide any cuts to spending on flagship programmes, and detailed a swath of infrastructure mission expansions corresponding to street enlargement.