Dr Ernest Addison, Governor of the Bank of Ghana has joined calls to urge the government to tone down on borrowing.
The mounting public debt situation has caused Ghanaians to call for the government to look in the direction of minimal borrowing.
Parliament has been urged by a Banking and Corporate Governance Expert, Dr Richmond Atuahene and other economists to join calls by using its powers in the constitution to stop the government from embarking on a further borrowing spree that could deepen the country’s woes.
Mr Atuahene said, “The failure to quickly establish a debt limit will result in the current situation repeating itself over and over again in the future and it is about time the country follows in the steps of Kenya and Germany by establishing a debt limit,”.
Dr Addison expressing his thoughts on the debate declared his support for the calls to tone down on borrowing as done in other countries.
“I think this is something that could be looked at. If you look at the European Union, they had criteria which had a debt ceiling. And in our convergence discussions with the West African common currency, we were discussing a debt ceiling, so it is not unusual to set caps for attaining certain objectives. If Ghanaians think we have reached a point where we can cap debt, the debate can be had and we will look at the pros and cons of that type of a decision,” he said to the media
Ghana has been classified as a high-debt distress country with the debt-to-GDP ratio projected to close 2022 at 104.6 per cent.
The Africa Pulse 2022 October Report revealed that Ghana’s debt could rise from 76.6 a year earlier as the government deficit and depreciated cedi compound the country’s woes.
Also, it projected debt to GDP of 99.7 per cent and 101.8 per cent of GDP in 2023 and 2024, respectively.
Ghana’s economy on the other hand is estimated at $72 billion, and about 70% of revenue this year will be used to service its debt.
The country was projected to be at high risk of debt distress and vulnerability due to rising debt servicing costs in the most recent International Monetary Fund debt sustainability analysis in 2021.
However, the Britton Woods institution rounded up a second negotiation with Ghana for a bailout program on Friday, October 7, 2022.