Former Finance Minister Seth Terkper has painted a grim picture of Ghana’s economy reiterating that the economy is drifting towards a Highly Indebted Poor Country (HIPC).
According to him, there is an immediate need for managers of the economy to present a plan on how to fix the economy to Ghanaians.
Speaking to Francis Abban on the Morning Starr Tuesday, Mr Terkper said the country’s debt profile has hit a dangerous threshold.
“Our debt had crossed 70% on the old basis and we became alarmed so President Mahama gave approval for the establishment of a sinking fund. Debt is debt and there’s nothing like free lunch. When you defer debt instead of paying it through the sinking fund, the debt is still debt.
“We shouldn’t be happy about deferral of debts because the nation could go back to HIPC. We came close to 70% and we were at risk of debt distress but now we’re debt distressed,” he said.
He further explained: “I think Dr Bawumia and Ken Ofori-Atta should come to the realisation that we’re not in a pretty position. They should listen to the IMF, moody’s. It’s not about two people. They should engage Cabinet and parliament. I think what we need are a plan and program. I’ve looked at the budget and when you look at the numbers from 2021- 2024, GRA’s revenue is still flat. Government should provide a plan on our tax structure. We don’t have that”.
Meanwhile, Economist with the University of Ghana Business School Dr Lord Mensah has cautioned Finance Minister-designate Ken Ofori-Atta against excessive borrowing from the Eurobond market.
Speaking to Starr News on expectations for the minister in the next term, Dr Lord Mensah said Mr Ofori-Atta would have to adopt a more conservative approach in dealing with matters of the economy.
He said “going forward, I’m expecting the finance minister to be conserved as much as he can. I was reading in the news today which indicates that he will explore avenues where we can raise bonds at a zero interest rate or coupon rate, what we call the ‘zero-coupon bond’.
“And trust me, our economy, looking at it at this time, I don’t know the cost of funds that we’ll incur if we decide to go and borrow in that manner.”