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Ghana ‘in high risk of debt distress’: Finance minister

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Minister Kenneth Ofori-Atta says depreciation of the cedi ‘seriously affecting’ Ghana’s potential to manage its public debt.

Ghana is at excessive threat of debt misery and has agreed on a debt administration technique with the International Monetary Fund (IMF), finance minister Kenneth Ofori-Atta stated on Thursday.

Ofori-Atta is in the course of negotiating a aid bundle with the IMF because the West African nation faces its worst financial disaster in a technology.

“The current debt sustainability analysis conducted reveals that Ghana is now considered to be in high risk of debt distress,” the minister advised lawmakers throughout his presentation of the 2023 price range.

“Government and the IMF have agreed on programme objectives, a preliminary fiscal adjustment path, debt strategy and financing required for the programme,” he stated, including he hopes to reach a deal “very soon”.

The depreciation of the Ghanaian cedi was “seriously affecting” the nation’s potential to manage its public debt, which has elevated to $48.9bn this 12 months, he advised parliamentarians, saying the forex has misplaced greater than 50 % of its worth.

“Our stock of debt has increased by 93 billion Ghana cedis ($7bn) this year alone due to the depreciation of the cedi since the beginning of 2022.”

Ghana will implement a debt alternate programme to handle the challenges, he stated.

Economic development is anticipated to gradual to three.7 % of gross home product (GDP) in 2022 from 6.7 % final 12 months, and to gradual additional to 2.eight % in 2023, he stated.

Ofori-Atta has confronted requires dismissal from each the governing occasion and opposition who accuse him of financial mismanagement. Last week, he apologised for the nation’s financial hardship however defended himself in opposition to their claims.

“I acknowledge our economy is facing difficulties and the people of Ghana are enduring hardships,” he stated final Friday. “As the person President Akufo-Addo has put in charge of this economy, I feel the pain personally, professionally, and in my soul.”

On Thursday, Ofori-Atta stated Ghana would impose a debt restrict on non-concessional financing amongst different reforms, and can concentrate on utilizing financial coverage to manage inflation, which has exceeded 40 %.

The authorities will freeze new tax waivers for overseas firms and overview tax exemptions for mining, oil and fuel firms. It will even freeze hiring for civil and public servants, he stated.

However, Ofori-Atta didn’t provide any cuts to spending on flagship programmes, and detailed a swath of infrastructure venture expansions akin to highway enlargement.

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