Incomplete disclosures about debt cannot foster debt restructuring exercise – Prof. Gatsi

The Dean of the University of Cape Coast School of Business, Professor John Gatsi, has said opaqueness and incomplete disclosures about debt cannot foster debt restructuring exercise.

He said the citizens and stakeholders would want to know the true debt position of the country.

In a paper on the country’s  debt situation titled “Debt restructuring in an environment of interest rate uncertainty: Ghana in IMF decision room,”  Prof.Gatsi said “While compiling and categorising the country’s debts, our leaders should be hearing the still voices of the youth, aged, industrialists, farmers, teachers, etcetera.”

According to him, Ghana has a lot to do to gain some market trust for debt restructuring which was part of the IMF pointers saying that “Now Ghana is indeed in the decision room of IMF. If you like say all the negative things about engaging the IMF.”

Ghana as a debt distress country waiting for redemption programme from the IMF Prof Gatsisaid,had to correctly identify all the portfolio of debts backed by appropriate instruments or debt contracts.

“All debt-like commitments, commitments through State-Owned Enterprises, commitments incidental to financial institutions via discounting contractors certificates and all debts known and discovered are to be analysed to take decision relating to debt restructuring,” he stressed.

The interest rate environment and debt categories such as commercial and concessionary debts were key factors into debt restructuring, adding that “The value of the debts to the country is very important to tilt investor decision in our favor. Without the IMF, vulture funds may invade our debt restructuring map.”

It would be recalled that an International Monetary Fund (IMF) staff team led by Carlo Sdralevich visited Accra from July 6-13, 2022, to assess the current economic situation and discuss the broad lines of the government’s Enhanced Domestic Programme that could be supported by an IMF lending arrangement.

The IMF team met with Vice President Bawumia, Finance Minister Ofori-Atta, and Governor Addison of the Bank of Ghana. The team also met with the Parliament’s Finance Committee, civil society organisations, and development partners, including UNICEF and the World Bank to engage on social spending.

The team in a statement said “Ghana is facing a challenging economic and social situation amid an increasingly difficult global environment. The fiscal and debt situation has severely worsened following the COVID-19 pandemic. At the same time, investors’ concerns have triggered credit rating downgrades, capital outflows, loss of external market access, and rising domestic borrowing costs.”

“In addition, the global economic shock caused by the war in Ukraine is hitting Ghana at a time when the country is still recovering from the COVID-19 pandemic shock and with limited room for maneuver. These adverse developments have contributed to slowing economic growth, accumulation of unpaid bills, a large exchange rate depreciation, and a surge in inflation,” the statement said.

“The IMF team held initial discussions on a comprehensive reform package to restore macroeconomic stability and anchor debt sustainability. The team made progress in assessing the economic situation and identifying policy priorities in the near term,” the statement said,

It said “The discussions focused on improving fiscal balances in a sustainable way while protecting the vulnerable and poor; ensuring credibility of the monetary policy and exchange rate regimes; preserving financial sector stability; and designing reforms to enhance growth, create jobs, and strengthen governance.”

BY KINGSLEY ASARE

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