‘Significantly slowdown expenditure to avoid worsening financial position’

An Associate Professor of Finance at the Andrews University in Michigan, Williams Peprah has advised the government to significantly slow down its expenditure in order to address the liquidity challenges in the economy.

According to him the country could not continue along the same spending pattern as witnessed in 2020 and 2021, since such expenditure would be disastrous to the economy.

Speaking in an interview with Joy Business yesterday, Professor Peprah said if the government failed to slowdown expenditure, it might further worsen Ghana’s financing position.

The government debt has been projected to hit about 104 per cent of Gross Domestic Product (GDP) by the end of 2022.

“With this projection of 104 per cent, if you put the country in the capacity of an individual it means that Ghana would be bankrupt by December [2022]”, Professor Peprah said.

“In the discussion ongoing with the IMF, this report will give a signal as to how IMF position itself to help Ghana”, he added.

On the country’s debt, he said, 57 per cent was external and therefore, the discussion on a potential debt restructuring was for the nation to push for some debt relief from the IMF and the World Bank

“If you look at our debt composition, about 57 per cent of our debt is external. International institutions like IMF/World Bank also hold about 23.6  per cent. So the discussion will be whether such institutions will also give some debt relief to Ghana”.

He said “Indeed, we have a lot of liquidity challenges at the moment. Government needs to slow down its expenditure. The country cannot continue along the same spending trend as 2020 and 2021.”

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