Minister Kenneth Ofori-Atta says the depreciation of the cedi is ‘severely affecting’ Ghana’s ability to manage its public debt.
Ghana is at high risk of a debt crisis and has agreed a debt management strategy with the International Monetary Fund (IMF), Finance Minister Kenneth Ofori-Atta said on Thursday.
Ofori-Atta is in the midst of negotiating a bailout package with the IMF as the West African country faces its worst economic crisis in a generation.
“The current debt sustainability analysis shows that Ghana is now considered to be at high risk of a debt crisis,” the minister told MPs during his presentation of the 2023 budget.
“The government and the IMF have agreed on the programme’s objectives, an initial fiscal adjustment path, the loan strategy and the financing needed for the programme,” he said, adding that an agreement is expected to be reached “very soon”.
The depreciation of Ghana’s cedi was “severely affecting” the country’s ability to manage its public debt, which has risen to $48.9bn this year, he told lawmakers, as the currency lost more than 50 per cent of its value. lost more.
“Our stock of debt has increased by 93 billion Ghana cedis ($7 billion) this year alone due to the depreciation of the cedi since the beginning of 2022.”
Ghana will implement a debt swap program to address the challenges, he said.
He said economic growth is expected to slow to 3.7 percent of gross domestic product (GDP) in 2022 from 6.7 percent last year, and to 2.8 percent in 2023.
Ofori-Atta has faced calls for his dismissal from both the ruling party and the opposition alleging economic mismanagement. last week, he apologized for the economic hardship of the country but defended himself against their claims.
“I acknowledge that our economy is facing difficulties and Ghanaians are facing difficulties,” he said last Friday. “I feel pain personally, professionally and in my soul for the person President Akufo-Addo has put in charge of this economy.”
On Thursday, Ofori-Atta said Ghana would impose debt limits on non-concessional financing, among other reforms, and focus on using monetary policy to control inflation, which has soared to more than 40 percent. .
The government will freeze new tax exemptions for foreign companies and review tax exemptions for mining, oil and gas companies. He said it would also put a halt to hiring for civil and public servants.
However, Ofori-Atta offered no cuts in spending on major programs, and detailed the expansion of infrastructure projects such as road expansion.