Vice President Dr Mahamudu Bawumia has stated that if the 54 billion debt for the three exceptional items (Covid-19, the financial sector, and the energy sector) were not included, Ghana’s debt to Gross Domestic Product (GDP) would have been within the sustainable threshold of about 68 percent, instead of the 76.6 percent at the end of 2021.
Dr Bawumia stated during a lecture at the Accra Business School that Ghana has recently experienced a quadruple whammy, which has had a detrimental effect on the country’s economy.
“Ghana won’t be turning to the IMF for assistance because our fiscal, debt, and balance of payments outlook would be sustainable,” the statement reads. Two of the four factors—Covid-19 and the Russian-Ukrainian War—were caused by external events, and the other two—the clean-up of the banking sector and the excess capacity payments—were the outcome of previous administration policies.
“Ghana’s debt to GDP would be within the sustainable threshold of about 68 percent instead of the 76.6 percent at the end of 2021,” according to the report. “Without the 54 billion debt for the three exceptional items (Covid-19, the financial sector, and the energy sector),
Spending on major flagship programs over a five-year period came to 15.62 billion, as opposed to spending on three exceptional items, which came to 54 billion. Ghana’s Debt Caused By Covid-19 & Russia-Ukraine War – Bawumia
According to Dr Bawumia, the three exceptional items’ annual interest costs will cover double the annual cost of all flagship programs.
The Vice President continued, “It is important to make decisions that will benefit Ghana regardless of whether we are applying for a program from the IMF or not. Restore fiscal and debt sustainability is the immediate task.
The Vice President added that a global phenomenon is to blame for the rise in food prices, inflation, currency devaluations, rising fiscal deficits, and debts. Ghana’s Debt Caused By Covid-19 & Russia-Ukraine War – Bawumia
He pointed out that the best course of action is to make strategic choices like the Bank of Ghana’s purchase of gold reserves and energy sector reforms, which will help stabilize the cedi over time.
“Despite being one of the world’s major producers of gold, Ghana’s gold reserves at the Central Bank at the end of 2021 were only 8.7 kilograms. Future debt and money would be secured by gold. Long-term cedi stabilization will result from this.
“The energy sector is also about to undergo significant reform. According to Dr Bawumia, the reforms will increase the sector’s market dependence.
We must further the economy’s digitalization because it is essential to our ability to participate in the fourth industrial revolution.