Ghana’s debt situation is holding the country back from developing, a professor at the University of Ghana Business School, Godfred Bokpin has said.
He stated that Ghana is trying to reach the destination that it is proud of but debt is the main obstacle.
Speaking at the 3Business Economic Sustainability Summit held in Accra on Tuesday, April 4, 70 percent of all our domestic revenue goes to debt servicing, it leaves very little space for growth and enhances spending.
“The IMF debt sustainability concluded that our debt is unsustainable and the meant that we needed to take steps to restructure our debts. what does supposed to mean . MoF eventually told us that in September 2022 our debt to GDP ratio in present value terms was 105 percent and we needed to reduce this it’s to 55 percent by 2028.
“Ghana is classified as a medium debt-carrying country per the IMF debt sustainability framework.
“So if you are a medium debt-carrying country then your debt-to-GDP ratio in present value term should not be more than 55 percent and Ghana is above 100 percent.”
He also said that Ghana has lost its status as an agricultural nation to service.
Even with the service status, he said, it is only based on retail and wholesale thereby relying heavily on importation.
Once the country imports heavily, it creates jobs for others countries and creates unemployment domestically, he added.
“Ghana, from independence, was known for agriculture but today Ghana is not known for agriculture. Ghana is known for service but the question is, is Ghana really a service-based economy?
“The answer is no. Typically, if you look at the economic transformation when a country begins from agriculture and suddenly service is leading it tells you that that economy is matured so it has gone through that process but in the case of Ghana we started off agriculture being the leading contributor to the GDP and then we skipped industry, that is what the data is telling us and then we jumped straight to service.
“That service sector is actually not quality service, it is the sector that is driven by retail and wholesale, largely import. Once your service sector is leading particularly in the area of retail and wholesale, once your industry isn’t doing well then it means the bulk of what is happening is going to be important, typically once you import, you are important unemployment,” he said.
By Laud Nartey|3news.com|Ghana
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