Debt restructuring: Ghana can go into recession – Expert

A banking consultant has said that Ghana’s economy may be headed toward a recession if the financial managers do not act appropriately.

According to Dr. Richmond Atuahene, the country’s high debt levels, which have led to debt restructuring, will make 2023 quite difficult if things are not aligned properly.

“We’re not going to have it easy. It’s going to be very difficult because everybody is talking, but they haven’t taken into consideration the debt-restructuring process. That itself can affect the economy so much that we will possibly go into recession,” myjoyonline.com quoted him.

Dr. Atuahene added that when recessions occur, the affected countries are not able to bounce back within a short period.

According to him, measures such as; debt-reduction, debt profile, debt restructuring, debt rescheduling, and debt swap as cited in the 2023 budget, hinder cash flow, therefore businesses are bound to suffer when these measures are indulged.

Meanwhile, a financial analyst, Professor Williams Peprah, has stated that the government should not conduct debt restructuring in a way that discourages investors from investing.

According to him, interest payments can be postponed whiles principals are paid under the possible programme.

Earlier, reports have revealed that some domestic investors were losing their investments due to an order from the Securities and Exchange Commission to banks.

The supposed order was for banks to use the mark-to-market approach to pay investors.

The investors have since lamented the inconveniences that this has caused while adding that some have begun losing part of their principal.

However, Prof. Peprah advised the government to restructure debt in a way that gives room for people to be able to access their principal when they want due to rising inflation in the country.

He said: “For the bonds, loss of confidence in the Ghanaian economy, it is better to defer interest payments and then pay principals so that people will be able to get cash flow to survive.”

“The reason why we’re seeing a lot of people trying to dump or discount their bonds now is because they need cash to survive because of the high inflation. So, government will have to have a metric where a certain class of investors is allowed to receive some funds to survive,” he said.

SSD/BOG