Former Finance Minister, Seth Terkpe says there will not be any miracle to save the ailing economy as projected by the Minister for Finance, Ken Ofori-Atta. According to him, it will take the country 5-years to recover from the economic challenges considering the level of debt this administration has piled down.
Mr. Ofori-Atta with his engagement with the media on the IMF negotiations pointed out that the government is looking forward to a miracle like that of Ireland in the 80s for an economic rebound. But, speaking on the Morning Starr with Francis Abban Mr. Terkpe expressed shock at the level of deterioration of Ghana’s economy to the point the World Bank has put the country’s debt-to-GDP ratio above 100 percent.
Mr. Terkpe further stated that only a prudent policy will salvage the economy and not a miracle. “The situation we are in now we have to go back to the early 80s or 70s and I gave you where we were with respect to our debts. To the extent that our budget is dependent on the Central Bank. By the way if there were things done off budget is likely to also include the Bank of Ghana financing which should be a loan to the government.
“It should be a loan and if it is not fully added which is something we have been analyzing quite recently based on the Bank of Ghana’s own balance sheet. Now the Fund is here and of course, it’s a monetary institution and they will look at that balance sheet,” Mr. Terkpe said.
He continued: “The Fund is more for the Central Bank than the Ministry for Finance. So it may be all of those things which have been adjusted now. Which is why we have a law that says that the borrowing should be five percent in the Act.” But Mr. Terkpe stated the current government came in and changed how the five percent borrowing plan should work within the law.
“So the miracle is where we are, it has to do with the future and it’s about real hard work. “It is when we have mastered this that we can win ourselves off the IMF. Which you must do cautiously because you will face a crisis and the rest. So what you have to do is have your own homegrown policy and reserve the right to go to the IMF when you have a genuine crisis,” he advised.
Meanwhile, the Africa Pulse Report by the World Bank places Ghana’s debt at a frightening percentage level. The World Bank’s report for October 2022 indicated Ghana’s debt will jump to 104.6 percent of GDP, from 76.6 percent a year earlier, by the close of this year 2022.
According to its October 2022 Africa Pulse Report, this comes amid a widened government deficit, massive weakening of the cedi, and rising debt service costs.