Economic crisis: Government must opt for debt forgiveness – IFS

The Institute of Fiscal Studies (IFS) has advised the government to opt for debt forgiveness considering the rate of economic growth in the country.

Speaking on Morning Starr with Francis Abban, Senior Research Fellow at IFS, Dr. Said Boakye stated that the government must develop the skills to engage its creditors on the move.

“It is not the only way out but it is a way that will help significantly. Domestic Debt Restructuring has taken place, 2023 seems to have had the maximum effect, interest payment, total debt service payment all brought down drastically.

“But we see from the government’s own numbers that it will go up sharp like this in 2024, 2025, 2026 going forward. If we don’t get debt forgiveness. This is temporary then it is going to cripple us again given the rate of economic growth we are experiencing. So something needs to be done,” Dr. Boakye stated.

He further indicated that in view of these assessments regarding foreign debts the government has to ask for some debt forgiveness as happened in 2000.

“The government is talking about a principal haircut which is debt forgiveness, the government is talking about it already and we are emphasizing that given the numbers debt forgiveness is significantly needed.

“So they have to increase their negotiation skills. We have to let the creditors know that without debt forgiveness going forward things are going to be very tough. The creditors themselves are going to suffer. Because if it happens that we are not able to pay debt we are not going to be the only people to suffer, they will also suffer,” Dr. Boakye stated.