Associate Professor of Finance at Andrews University, Michigan, USA, Williams Peprah, has urged the government to lobby the Official Creditor Committee to secure a better deal in order to help reduce the country’s external debt significantly.
According to him, Ghana’s debt problem is due to the high foreign denominated debt, which is impacted by exchange rate losses.
The country’s public debt went up by ¢6.3 billion between April 2023 and June 2023 to ¢575.5 billion. Professor Peprah told Joy Business, government must ensure the foreign creditors agree to significant haircut in order achieve the target for the debt restructuring.
“Ghana’s financing option in the time pass has been the problem. We mostly relied on foreign denominated loans; they were the main issues why our debt situation got worse especially when we convert the foreign denominated loans back into cedis which experiences rapid devaluation. The only way to save the economy or this financial stress is to have a significant cut in the external creditors’ holdings”.
“This negotiation is also delaying a little bit and if it is not done very fast the situation will get worse”, he added.
The Chartered Accountant cum Finance Lecturer said the government should be concerned about the high domestic debt despite domestic debt going down drastically.
“Currently, government is only relying on the short term securities to survive and that is why the domestic debt is going up, even though we have done the domestic debt exchange. Its impact has not been felt even though it should be”.
“The solution to this is to get the external creditors accept a significant haircut and that will free Ghana a little bit in terms of debt repayment”, he added.