Reduce reliance on international capital markets for loans - Auditing firm urges government

Financial advisory and auditing firm, Deloitte has called on government to reduce its reliance on the international capital markets for loans.

According to the firm, it will be more prudent for government to adopt concessionary loans which could significantly improve the country’s rising public debt stock which is currently at GH¢393.4 billion as at June 2022.

In its latest assessment report of the 2022 Mid-Year Budget, Deloitte urged government to implement pragmatic measures to control the country's rising debt stock.

“Government should consider reducing its reliance on the international capital markets and switch more towards concessionary loans in order to contain the rising interest expense,” the report noted.

“Funds borrowed from the international capital markets should be invested more in capital projects with the ability to boost foreign exchange earnings and increase foreign exchange reserves,” Deloitte proposed.

It further pointed out that although government was able to maintain all expenditure items captured within the budget, high-interest payments on loans, high cost of borrowing on the domestic market have all resulted in the depreciation of the cedi against major trading currencies.

Deloitte added that government must however hasten its fiscal consolidation efforts, and adopt prudent spending measures to help restore macroeconomic stability in the medium to long term.

The financial advisory and auditing firm in its report also advised government to make investments in critical sectors of the economy to help propel growth and job creation.

Read the full report below:



MA/ESA