Ghana could default on debt payment if government fails to seek debt relief - Ato Forson

BY: graphic.com.gh
Dr Cassiel Ato Forson
Dr Cassiel Ato Forson

The Member of Parliament (MP) for Ajumako Enyan Essiam constituency and Minority Ranking Member on the Finance Committee of Parliament, Dr Cassiel Ato Forson, has cautioned that Ghana could fail to meet its debt service obligations if urgent steps are not taken to seek debt relief from its lenders.

The Finance and Accounting practitioner was speaking at a Policy Dialogue held at the University of Professional Studies, Accra on Monday, July 26, 2021.

He said the current debt profile of the country made it unsustainable and was putting severe pressure on the nation’s finances, making it difficult to meet debt service deadlines while meeting other expenditure commitments at the same time.

Dr Forson said available figures showed that up to 87 per cent of government tax revenue went into debt servicing which is the payment of interest and amortisation alone, leaving very little for investment in critical sectors of the economy.

That, he said, would worsen if the current borrowing situation continued into the foreseeable future.

“The Akufo-Addo/Bawumia government must seek urgent debt relief from the International Monetary Fund (IMF) through the newly proposed Debt Relief Initiative, known as the Common Framework for Debt Treatments Beyond the Debt Service Suspension Initiative (DSSI), which can be likened to the HIPC Initiative,” Dr Forson said at the event attended by a cross-section of Minority MPs and some Academics drawn from various Universities in the capital.

He added that “Failure by the Akufo-Addo/Bawumia government to do as recommended, within the next 18 months, would expose Ghana to a High Risk of Default on its debt service obligations which will plunge the country into much deeper economic crisis”.