A report prepared by the Economic Commission for Africa (ECA) named Ghana as the 8th country in Africa facing a high risk of debt distress. The World Bank and IMF have maintained Ghana as a high-risk of debt distress country.
This generally infers that the country is accumulating so much debt that it may not be able to repay and this was captured in the latest Debt Sustainability Analysis (DSA) released by the World Bank and IMF. And, according to the Institute for Fiscal Studies, the impact of Ghana’s rising public debt is most strongly felt on the country’s debt servicing bill.
Closing of the fiscal impact of the COVID-19 pandemic should not be used as an excuse to over-bloat the country’s debt, Professor Newman Kwadwo Kusi, the Executive Director, Institute for Fiscal Studies opines.
Professor Kusi maintains that while borrowing to support the alleviation of the COVID-19 crisis is not an issue, the fact of the matter is that Government has taken too many loans in recent years with very little to show in terms of significant development projects.
“The pandemic does not give the Government the power to disregard the public financial management rules and regulations”.
There is therefore a critical need for the Government to ensure that monies borrowed by it and/or donated to support the fight against the COVID-19 pandemic are put to efficient and effective use.
Ghanaians therefore demand greater accountability and transparency of the management of the fiscal impact of the COVID-19 pandemic. This is imperative because Ghanaians are entitled to establish that funds made available from foreign donors to the country or from the BoG, local organizations, businesses and individuals, etc. to the government are fully and efficiently utilized for the intended purposes only.
Recently, a United States’ top Africa diplomat warned African countries running up debt that they won’t be able to pay back, including to China, not to expect to be bailed out by western-sponsored debt relief.
U.S. Assistant Secretary of State for Africa for African Affairs Tibor Nagy noted that in the last 20 years, a lot of African countries went through debt forgiveness, in reference to the HIPC programme. “Now all of a sudden are we going to go through another cycle of that? … I certainly would not be sympathetic, and I don’t think my administration would be sympathetic to that kind of situation”, he said in Pretoria, South Africa.