The Ministry of Finance (MoF) is set to table a proposal before Cabinet for the establishment of a financial buffer that will allow the country to easily pay its bilateral debts when repayment resumes in 2026.

This proposal comes after the country formalized and secured an agreement with bilateral creditors to suspend payments of its debts due between 2023 and 2026.

Speaking to the media in Accra last week, Finance Minister Dr. Mohammed Amin Adam stated that the agreement with bilateral creditors would provide significant debt repayment relief for the country.

“We are proposing the establishment of a buffer that could help us repay these facilities when repayment resumes after 2026 in a manner that will reduce the fiscal burden on the budget at the time.

“The relief we got during HIPC, all the money was spent, this time we are proposing to Cabinet to consider not spending all the money that we would have used to service our debt,” the Finance Minister explained.

The Ministry of Finance will also present options to Cabinet on how to best invest this money to reduce the fiscal burden when repayment resumes in 2026.

One proposal, is to set aside part of the funds to build buffers for repayment after 2026, reducing the budgetary strain at that time.

“What this means is that debt service that was due between 2023 and 2026 has been rescheduled and we will not have to service them now.

“The money we would have used to service the debt will now be available to the government to spend on critical sectors of the economy,” the Minister said.

Dr. Amin Adam emphasized that unlike previous relief efforts, this time they are considering not spending all the money saved from debt servicing.

He mentioned that the government instead plans to increase tax revenue to ease the burden of repayment in 2026.

“We intend to increase revenues and we are working on that in the medium term. We expect a tax-to-GDP ratio of 16.5 in 2016 and this is possible because we are projecting to grow the economy by 5% by that time,” he said.

The Finance Minister said these efforts demonstrate the government's commitment and capacity to repay debts when due.

MA/NOQ

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