Think-tank CSJ urges Ghana’s next government to initiate another debt restructuring by 2025

Haruna Alhassan, a finance expert and fellow at the Centre for Social Justice (CSJ), has advised Ghana's incoming government to begin another round of debt restructuring by 2025.

This call aims to prevent the country from facing default and further economic hardships.

During his keynote address at the 13th edition of the Leadership Dialogue Series (LDS), organized by CSJ, Alhassan stressed the importance of reversing the "borrowing for consumption" approach.

He urged the future administration to invest borrowed funds wisely to avoid perpetual bankruptcy.

On July 1, 2022, President Nana Akufo-Addo directed then-finance minister, Ken Ofori-Atta, to engage the International Monetary Fund (IMF) for a debt-restructuring programme.

This move, effectively declaring the nation bankrupt, had significant repercussions for bondholders.

"We may come out of the bankruptcy temporarily because of debt restructuring, but overall, we will still have a debt burden that we will struggle to pay. Going into 2025 to 2028, if you look at the payment profile of the restructured bonds, we cannot run away from having a second round of debt restructuring and we must start that engagement right from 2025," Alhassan stated.

The 13th LDS, themed "Ghana’s Economy from 2025 – 2028: The Hard Choices," saw various experts proposing strategies for the next government to restore Ghana's economic stability. Alhassan predicted that the next administration would face significant challenges in addressing the current economic hardships.

"The road ahead will be tough. Tough, rough, and bumpy," warned Alhassan. He added that from 2025, the ideal government for Ghana would be led by an experienced individual capable of navigating these complexities.

The recent domestic debt exchange programme has faced criticism for being chaotic and insensitive, particularly for targeting some pension funds.

Studies suggest that this programme could reduce the wealth and income of individual households, either directly through retail holdings or indirectly through shares in mutual funds and pension funds.

To avoid the chaos that marked the recent programme, Alhassan recommended that the next government start the negotiation process early. He reiterated that only an experienced leadership could steer the country through the anticipated economic difficulties.

The Leadership Dialogue Series is CSJ's flagship civic education platform, aimed at fostering mass political participation and patriotic values through engaging discussions with experts and prominent national leaders.

CSJ, a left-of-centre think tank, serves as a platform for academics, activists, and patriots advocating for greater social inclusion in the distribution of wealth, privileges, and opportunities in society.

EK