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Ghana needs to take an urgent decision to restructure, ensure debt sustainability – Ato Forson

Ato Forson 322 Ranking Member of Parliament’s Finance Committee, Dr. Cassiel Ato Forson

Thu, 6 Oct 2022 Source: www.ghanaweb.com

The Ranking Member on Parliament’s Finance Committee, Dr. Cassiel Ato Forson, has stated that a decision to ensure Ghana’s debt sustainability should be taken as soon as possible, before discussions with the IMF advance.

According to him, government needs to adopt some level of proactivity in choosing what forms of debt restructuring regimes it would have to adopt.

“Ghana, as we speak, is going through sovereign insolvency stress, we’re simply insolvent. So, what we need to do is to take a decision to restructure. But the question is what kind of restructuring?

“That is the kind of conversation I believe we have to go in. We have to consider the kind of restructuring that we’ll do that will safeguard the economy and preserve us going forward. I believe that is where we’ve gotten to at this stage,” he is quoted by myjoyonline.com on October 5, 2022.

Ghana’s debt has been projected to become unsustainable after its debt to GDP is expected to hit about 104%.

However, Ato Forson believes that if the government will pursue a debt restructuring, it has to be aware of which debt relief package it will want to adopt.

“The first thing is after identifying that the debt is unsustainable how do you make it sustainable before you get the IMF programme? You need to agree on the debt relief that you will require. If you’ll need 20%, 30%, or 40% of your GDP in the form of debt relief, that brings the question, who will bear that burden?

“How are you going to burden share? Are you going to tackle external, domestic, or everybody else? Are you going to add an official bilateral or not? At that point, you need to make a decision, and would debt restructuring alone do the trick? Because remember debt restructuring deals only with commercial debt holders.

“So, if you’re going to deal with the official bilateral and export credit agency you need more than debt restructuring. You will need what we call a debt suspension initiative under the common framework. So that will mean you’ll need a double do,” he said.

He advised that government seeks counsel and professional advice from knowledgeable people in the country, especially in academia.

Ato Forson added that Ghana’s situation is beyond political gimmicks.

“The academia is big, you can tap into their knowledge, civil society, and even the political divide, across the political divide and pick knowledge. Let’s sit down and confront the situation at the national level. Unfortunately, they’re dealing with it at the partisan and political party level, which isn’t helpful. The situation goes beyond politics. We need to rescue our country because this is all we have and the situation is getting worse by the day,” he added.

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Source: www.ghanaweb.com
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