Ghana at high risk of debt distress, finance minister says

Ghana at high risk of debt distress, finance minister says By Reuters

Breaking News

‘;

Economy 2 minutes ago (Nov 24, 2022 09:55AM ET)

(C) Reuters. FILE PHOTO: Police personnel guide protesters as they march in the streets to demonstrate against worsening economic crisis and to call on the president to step down, in Accra, Ghana November 5, 2022. REUTERS/Francis Kokoroko/File Photo

By Christian Akorlie and Cooper Inveen

ACCRA (Reuters) – Ghana will freeze the hiring of public and civil servants and extend a moratorium on government car purchases and non-essential travel in order to tackle a spiralling debt crisis, finance minister Ken Ofori-Atta said on Thursday.

Presenting the West African nation’s 2023 budget in parliament, Ofori-Atta said Ghana was at high risk of debt distress and has agreed on a debt management strategy with the International Monetary Fund (IMF).

Ofori-Atta did not offer any cuts to spending on flagship programmes, however, and detailed a range of wider infrastructure and social investment.

The minister is negotiating a relief package with the IMF as the cocoa, gold, and oil-producing nation faces its worst economic crisis in a generation.

Investment bank Morgan Stanley (NYSE:MS) said on Thursday that it expected Ghana to restructure both its domestic and external debt.

“The current debt sustainability analysis conducted reveals that Ghana is now considered to be in high risk of debt distress,” Ofori-Atta told lawmakers.

“The government and the IMF have agreed on programme objectives, a preliminary fiscal adjustment path, debt strategy and financing required for the programme,” he said, adding he hopes to reach a deal “very soon”.

He said the depreciation of the cedi was “seriously affecting” Ghana’s ability to manage its public debt, which has increased to $48.9 billion this year.

Ghana will implement a debt exchange programme to address the challenges, he added.

“The good news is that all revenue measures are in line with what the IMF would have wanted,” said Razia Khan, chief economist for Africa and the Middle East at Standard Chartered (OTC:SCBFF).

“Now we await details of the debt exchange plan. So far – as favourable as might have been hoped.”

BAN USE OF GAS-GUZZLERS

Ofori-Atta outlined a number of measures that will enable the government to cut expenditure and boost revenue including a 2.5 percentage point increase in value added tax to 15%, a freeze on new tax waivers for foreign companies and a review of tax exemptions for free zone, mining, oil and gas companies.

Despite the projected increase in revenue, Ofori-Atta said the fiscal budget would increase to 7.7% of GDP from 6.6% over the coming year.

The government will also ban the use of V8 and V6 engine vehicles and extend a 50% reduction on fuel allocations and a ban on non-essential travel.

“It has become even more urgent to mobilise domestic revenue especially in times like this when our access to the international capital market is largely closed,” he said.

Ghana’s economic growth is expected to slow to 3.7% in 2022 from 6.7% last year, and to 2.8% in 2023, he said.

Ofori-Atta has faced calls for his dismissal from both the ruling party and opposition who accuse him of economic mismanagement. Last week he apologised for the country’s economic hardship but defended himself against their claims.

Ghana will impose a debt limit on non-concessional financing among other reforms, and will focus on using monetary policy to control inflation, which has exceeded 40%, the minister said.

($1 = 14.0000 Ghanian cedi)

Ghana at high risk of debt distress, finance minister says

ECB’s Schnabel pushes back on smaller rate hikesBy Reuters – Nov 24, 2022

LONDON (Reuters) – European Central Bank board member Isabel Schnabel pushed back on Thursday against calls from many of her colleagues for smaller interest rate increases by the…

Analysis-Slower Fed hikes spell relief from Tokyo to Buenos AiresBy Reuters – Nov 24, 2022

By Balazs Koranyi and Karin Strohecker FRANKFURT (Reuters) – The Federal Reserve’s signalling of a slowdown in the pace of U.S. interest rate hikes takes pressure off global peers…

UAE’s deal-hungry IHC plans health and IT business IPOsBy Reuters – Nov 24, 2022

By Yousef Saba and Rachna Uppal ABU DHABI (Reuters) – International Holding Company plans to sell 20% of its technology unit in an initial public offering next year, its CEO told…

Our Apps



Terms And Conditions
Privacy Policy
Risk Warning

(C) 2007-2022 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

About the author

Related