Dr. John Kwakye, the Director of Research at the Institute of Economic Affairs (IEA), has expressed concerns regarding the government’s decision to return to international capital markets at this time.
He argues that Ghana’s ongoing debt crisis warrants caution, stating, “Do we really need to return so soon to international capital markets when our debt crisis is not yet over and we have suspended external debt payments? Why can’t we try to balance our budgets to reduce borrowing?”
His comments come in light of the government announcing its re-entry into international financial markets following the successful restructuring of $13 billion in Eurobonds on October 8. This marks a significant moment as Ghana previously lost access to these markets due to unsustainable debt levels.
The Presidency noted that on June 24, an agreement in principle was reached for restructuring the outstanding Eurobonds, which has been approved by the International Monetary Fund (IMF).
More than 90% of bondholders voted in favor of the restructuring deal, which aims to enhance Ghana’s debt sustainability by reducing the debt stock by $4.7 billion and providing approximately $4.4 billion in cash flow relief over the next two years.
President Nana Addo Dankwa Akufo-Addo highlighted the significance of this achievement, stating it represents a turning point for the economy and a return to a sustainable debt path. He expressed gratitude to bondholders, the IMF, and other stakeholders for their support.
The Finance Minister, Mohammed Amin Adam, emphasized the positive effects of this restructuring on Ghana’s macro-financial situation, noting a decrease in inflation and an optimistic growth outlook following the highest quarterly GDP growth in five years.
While the government is optimistic about its economic recovery plan, Kwakye’s critique raises important questions about the timing and implications of such a move amidst the lingering challenges of the debt crisis.
