An Associate Professor of Finance at Andrews University, Michigan, USA, Williams Peprah, has stated that the government must try as much as possible to get external creditors to give significant haircuts on its debt.

He said the negotiations must also be done swiftly if not the country’s debt situation could worsen.

Prof. Peprah also said Ghana must slow down on its debt accumulation.

“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 converted the foreign-denominated loans back into cedis which experienced 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 told myjoyonline.com.

Ghana’s public debt increased to ¢575.5 billion between April and June 2023.

Prof Peprah also said the government must be careful with its domestic borrowing to be able to feel the intended impact of the domestic debt exchange programme.

“Currently, government is only relying on 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 to accept a significant haircut and that will free Ghana a little bit in terms of debt repayment,” he added.

SSD/NOQ

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