• This comes after Moody’s rated Ghana’s economic outlook as negative
• The ratings were as a result of the country’s increasing debt burden
Head of Finance at the Valley View University, Dr Williams Peprah has cautioned that Ghana is likely to make more interest payments to investors should it go to the international bond market to borrow more funds for budget financing.
His warning comes on the back of the international ratings agency affirming Ghana's longer-term issuer ratings at B3 as well as a negative economic outlook attributed to a high debt burden, a continued weak debt affordability, high gross borrowing requirements and current liquidity challenges.
In an interaction with Joy Business, Dr Peprah pointed that government must implement stringent measures to rationalize its expenditure and raise more revenue from about 13 percent to 20 percent of Gross Domestic Product.
“Moody’s affirmation of B3 ratings on Ghana’s bond exposure is an indication that our debt instruments presently is classified as highly speculative. This means that anytime Ghana goes to the international market to borrow, it will be paying high coupon or interest. The Moody’s assessment is basically based on our debt exposure where we are using about 40% to 50% of our revenue to service debt,” Dr Peprah said.
“Anytime Ghana goes to the market, it must compensate investors with a high interest or coupon before they will lend any funds to us. So, this is not good news to the country which must be looked at. I think that the government must make sure that everybody pays his share of the revenue in the form of taxes…it must be addressed quickly,” he added.
Dr Peprah said Ghana’s balance sheet is also currently not in the best place hence more measures are needed to be implemented to address the situation. Read Full Story
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