Servicing debt with 10% of GDP unsustainable – Duffuor

The current trend where 10 per cent of Ghana’s Gross Domestic Product (GDP) is used in servicing the country’s debt should be reconsidered because it is not sustainable, Dr Kwabena Duffuor, a former Minister of Finance and ex-Governor of the Bank of Ghana, has said.

According to him, the country will need to make progress by working hard to improve on the situation where the public debt is being serviced with 10 per cent of its GDP.

Speaking at a stakeholder forum on the prudent use of the Heritage Fund in Accra on Monday February 13, Dr Duffuor said: “On the debt servicing, can we afford to spend over 10 per cent of our GDP to service debt? Is that sustainable? Are we going to think of the need to negotiate with our creditors? It was done years ago. Can we do that and get let’s say 3 or 4 or 5 per cent so we will have breathing space. Can we also begin to look at that?

“Because 10 per cent of our GDP cannot be used to service debt. It is not sustainable. We need to make some progress, we need to grow the economy now and looking at where we are now we will have to begin to look at all these options, it is important.

“Deferring part of the revenue, earmarking, looking at the generational funds, looking at debt servicing and a lot of issues so that for this year we will have some breathing space. Now we can’t breathe and if we have debt to GDP ratio of 74 per cent as of now, are we going to borrow again?”