Economist and Director of Research at the Danquah Institute, Dr Frank Bannor says the debt restructuring was important to boost the economy.
His remarks follow an agreement where Eurobond holders are expected to forego about $4.7 billion owed them by the Government of Ghana.
This is part of an agreement reached with the Bondholders in restructuring a $13.1 billion debt.
The term sheet covering the Eurobond deal, showed that the Bondholders will also provide a cash flow of $4.4 billon, during the period under the International Monetary Fund (IMF) programme.
The Bondholders have also agreed to a 37 percent haircut on their interest and maturity.
Speaking on JoyNews’ Newsfile on June 29, Dr Bannor pointed out that, interest payment is the second highest expenditure in Ghana.
According to him, the amount of money used to service interest is greater than the amount of money given to government and other state institutions and that poses a serious problem.
“If this is the case where you are being told that, within the next three years, you can keep this money, you don’t need to pay this money to us. Then obviously you can rationalize expenditure by inverting these sums of money into prudent ventures of the economy.”
Dr Bannor stated that in a developing economy like Ghana, having more financial flexibility allows the government to invest in these vital areas.
“You know that this is a developing economy and you know that, when it comes to infrastructure, agriculture and other critical parts of the economy, a lot is required in terms of funding. So if we are having this physical groom, then we don’t need to pay these monies, then obviously, it gives government that leverage to invest in these critical sectors of the economy.”
“So obviously, we cannot downplay the significance or the importance this restructuring brings to the economy.”
Source: Myjoyonline