Economic crisis: Ghana risks further 'haircuts' in the future - Ofosu-Dorte cautions

Chairman of AB & David Africa, David Ofosu-Dorte has cautioned that Ghana risks facing further economic-related haircuts if government continues to tread on its excessive expenditure habits.

He believes that although the economy may begin to stabilize by 2024, Ghana may yet again find itself undertaking another debt restructuring exercise to address its debt situation which has currently reached unsustainable levels.

Delivering a lecture organised by the UPSA Law School and OneGhana Movement in Accra on January 5, 2023, the law practitioner urged government to remain fiscally disciplined in its resolve to sustain the economy.

“Let’s remember that NDC had a haircut years ago for the banking sector only. This time round, there is haircut 2 which has affected other entities. We are likely to have a “head cut” the next time. Watch 2027 to 2029, if we continue what we are doing, we will be more broke than we are now,” he noted.

“The history is very clear, anytime you are declared the fastest-growing economy, five to seven years later, you will be back to the IMF. I do not blame the IMF for it. You will notice that it encourages borrowing, and it forces us to walk to the IMF for some discipline. The economy will stabilise by 2024, but if we keep doing what we are doing now, we will find ourselves in a situation where we are forced to borrow more,” the law practitioner added.

As part of efforts to reach an agreement with the International Monetary Fund to restore macroeconomic stability, among others, government plans to undertake a Domestic Debt Exchange programme (DDE).

The exercise is a key requirement for reaching Board Approval from the Fund to secure an amount of $3 billion under an Extended Credit Facility.

Under the DDE programme, government is inviting domestic bondholders to voluntarily swap their bonds for fresh ones. It is targeting approximately GH¢137.3 billion of principal amount, outstanding of certain domestic notes and bonds issued by the government.

MA/DA