The government has begun accumulating funds to meet a GH¢54 billion debt obligation under the Domestic Debt Exchange Programme (DDEP) due next year, according to Finance Minister Dr Cassiel Ato Forson.
Speaking during a working visit by the Vice President, Dr Forson explained that the move aims to avert future debt distress and prevent the country from slipping back into the economic crises that triggered its debt restructuring.
The minister revealed that the state has already established adequate financial cushions to clear two substantial DDEP obligations falling due this year.
A payment of GH¢10 billion was settled in February, with a further GH¢10 billion scheduled for early August.
“Ten billion, ten billion Ghana cedis each. So we paid one in February and one is also due first week in August — another GH¢10 billion. But I’m proud to say that we are prepared to make that payment because we have built enough buffers to be able to pay that,” he said.
“Next year alone we are seeing debt repayment. DDEP alone, we have to service debt about GH¢54 billion,” he stated.
Dr Forson stressed that early preparation is critical, warning that defaulting on these commitments would severely damage the economy.
“In February, we have to pay about GH¢39 billion in one day — GH¢39 billion Ghana cedis. And so that means that we have to begin saving ahead of those bullets because we all know the repercussions of not servicing your debt and going into debt default, and we’ve seen it recently in 2022,” he said.
Reflecting on Ghana’s recent economic turmoil, the Finance Minister cautioned against the perils of unsustainable fiscal policy. He likened reckless borrowing and spending to short-term indulgence followed by prolonged hardship.
“As for an unsustainable fiscal path, if you go on that path you’ll pay a difficult price for it. I’ve always said that it’s like alcoholism. The good effect comes early, and the hangover comes later,” he said.
“You borrow, you spend, you go happy one week, one day, and afterwards the hangover will be there for a long time, and everybody else will pay for that,” he added.
According to Dr Forson, the country has navigated roughly 18 months of its economic adjustment programme. He indicated that only six months remain before the government pivots toward a growth-oriented economic model.
“We have always been aware that the problems we inherited would require two straight fiscal years of major consolidation. And so we went through that path, and we’ve seen 18 months of it,” he said.
“We are left with six months, and I’m sure after the six months we’ll have to change the course and move from shock therapy to what I call the new economy, where growth and jobs would drive the new order.”
By: Rainbowradioonline.com/Ghana