Take prudent measures in dealing with rising debt stock – Prof. Bokpin

Tue, 3 Aug 2021 Source: www.ghanaweb.com

•Government has been tasked to take a radical approach towards dealing with the increasing debt stock situation

•Some economists have warned that Ghana is likely to seek debt relief from the IMF and the World Bank if the situation persists

•Ghana has already sought relief from the IMF sixteen times

An economist, Professor Bokpin has admonished government to take prudent but radical steps in dealing with the country’s rising debt stock.

Ghana’s debt stock reached GH¢332 billion with a debt to Gross Domestic Product ratio pegged at 76.6% as at the end of May 2021.

Already some economists and analysts have warned that Ghana is likely to seek debt relief from the International Monetary Fund and the World Bank.

But Prof Bokpin believes that in order to reverse the situation, government must tackle issues like corruption hands-on and take prudent revenue generation measures.

Another economist, Dr Williams Peprah who is Head of Finance at the Valley View University on his part believes that funding from the IMF and World will come in cheap to assist in stabilizing the Ghanaian economy.

Dr William Peprah explained that interest cost are likely to reduce should government desist from borrowing on the commercial market but rather seek reliefs from the Bretton Woods Institutions.

“It’s a major concern for every government how they measure their debt. What I noticed when the budget was read was that government was trying to make sure that it has a good balance of the debt; 50% from domestic market and 50% from external.

“When government is successful in doing that, sometimes it’s good for the country. From the last monetary policy report by the Bank of Ghana, we’re noticed that debt was gradually increasing and that is a major threat to our economy,”, he pointed out.

“What I have been advising is to go to IMF and World Bank for some funds. In that case, it becomes a cheaper source of funds. Our interest rate will not increase, our reserves will rather be boosted because of high exports as well as a stabilize economy,” he said.

Meanwhile, Ghana has since 1966 failed to sustain its debt stock situation. The worrying trend has however forced the country to seek relief from the IMF, sixteen times to sought for debt relief.

Already the Bretton Woods institution following its recent consultation with the Economic Management Team is predicting that Ghana is likely to return for a debt relief should the rising debt stock situation persist.

Source: www.ghanaweb.com