Minister Kenneth Ofori-Atta said the cedi depreciation “seriously affects” Ghana’s ability to manage its public debt.
Ghana’s Finance Minister Kenneth Ofori-Atta said Thursday that Ghana is highly vulnerable to a debt crisis and has agreed a debt management strategy with the International Monetary Fund.
Afori-Atta is in the midst of negotiations for a relief package with the International Monetary Fund as the West African country faces its worst economic crisis in a generation.
“The current debt sustainability analysis that has been undertaken reveals that Ghana is now considered to be at high risk of debt distress,” the minister told lawmakers during his presentation of the 2023 budget.
“The government and the International Monetary Fund agreed on the program’s objectives, the path of the initial fiscal adjustment, the debt strategy, and the financing required for the program,” he said, adding that he hoped to reach an agreement “very soon.”
He told parliamentarians that the depreciation of the Ghanaian cedi “seriously affects” the country’s ability to manage its public debt, which has risen to $48.9 billion this year, saying the currency has lost more than 50 percent of its value.
“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.”
He said Ghana will implement the debt swap program to meet the challenges.
He said economic growth is expected to slow to 3.7 percent of GDP in 2022 from 6.7 percent last year, and to slow further to 2.8 percent in 2023.
Ofori Atta faced calls for dismissal from the ruling party and the opposition, who accuse him of economic mismanagement. Last week, it is I apologize The country was suffering from economic hardships, but he defended himself against their claims.
“I recognize that our economy is in difficulty and that the people of Ghana are in difficulty,” he said last Friday. “As the person placed in charge of this economy by President Akufo-Addo, I feel the pain personally, professionally and in my soul.”
On Thursday, Ofori Atta said Ghana would impose a debt limit on non-concessional financing among other reforms, and focus on using monetary policy to control inflation, which has exceeded 40 percent.
The government will freeze new tax breaks for foreign companies and review tax breaks for mining, oil and gas companies. He said he would also freeze the hiring of civil servants and public servants.
Ofori-Atta, however, did not make any spending cuts on major programmes, detailing a range of infrastructure project expansions such as road widening.