Former finance minister Seth Terkper has issued a stark warning about the heavy debt burden facing Ghana's next government, slated to take office in 2024.

In a media briefing discussing Ghana's engagement with the International Monetary Fund (IMF) and the country's debt restructuring efforts, Seth Terkper pointed out the alarming depletion of national financial reserves and buffers, which are necessary for maintaining economic stability.

Seth Terkper emphasized that the incoming administration will inherit a significant debt challenge and criticised the current fiscal framework for its over-reliance on the Primary Balance—a measure that excludes critical financial obligations such as interest payments, arrears, and amortisation.

“The next administration will be saddled with a significant debt burden. Our reserves and financial buffers, which provide essential leverage for economic management, have been nearly exhausted. This situation has been exacerbated by our reliance on the Primary Balance, which, given the IMF's data, will only lead to complacency again," he lamented.

Highlighting the gravity of the situation, Terkper noted that arrears in sectors like energy and banking, have contributed to the public debt but are not adequately accounted for in the 'financing' section of the fiscal framework.

"Using the Primary Balance as a measure of fiscal health excludes critical elements like interest payments, arrears, and debt repayments.

"For example, arrears, including those in the energy and banking sectors, were estimated to be GH¢53 billion in 2021. A portion of this has been added to the public debt, yet it is not reflected in the fiscal framework's 'financing' section," he explained.

Seth Terkper also cautioned against premature celebrations of economic recovery, arguing that any perceived progress has been largely due to the sacrifices made by domestic and external lenders, who have endured significant financial losses.

"There is no need to be jubilant. The view that we have made progress is premised on the sacrifices and largesse of domestic and external lenders. Our legacy may not make us third-time lucky.

“After HIPC (forgiveness), we should not have defaulted again. We should have continued on the PRMA path, managing crises with significant inflows from our oilfields and the recent IMF tranches and donor support," he stated.

Despite the IMF's report of a 4 percent improvement in Ghana's primary fiscal balance last year, Seth Terkper's insights suggest that the road ahead may be fraught with difficulties.

ID/MA