Fitch ratings downgrade Ghana’s creditworthiness from a B to a B minus
We have been too wasteful, Prof Bokpin on Ghana’s expenditure
Economist at the University of Ghana Business School, Prof. Godfred Alufar Bokpin, has said the country's economy is on the verge of collapse.
Speaking in an interview on Joy FM, Prof Bokpin said looking at Ghana’s current debt situation, worse could happen by the end of September 2022, unless stringent measures are adopted.
He made this assertion following the report on the rate of increase in Ghana’s debt stock.
As of September 2021, Ghana’s public debt stock hit a record high of GH¢341.8m which means a division of this figure by the population leaves each citizen of the country owning GH¢11000.
Prof. Bokpin said, “when you see the proportion of the debt payment, relative to the size of the revenue envelope and you look at your rising debt and you look at the rate of economic growth and the drivers of that growth, you can reasonably predict that it’s just a matter of time that the economy will just collapse. We’re probably going to run into a little bit more difficulties towards the end of September."
Fitch ratings, in its latest report, downgraded Ghana’s creditworthiness from a B to a B minus, with a projected 83% debt-to-GDP for the year ending December 2021.
This means that government’s ability to secure loans from the international market will be somewhat difficult as the e-levy is yet to be approved by Parliament.
Meanwhile, government has indicated that it will borrow a total of GH¢24.5 billion from the domestic market of which GH¢20.7 billion will be used in the servicing of existing debt in the local market leaving government with just GH¢3.8 billion to finance other expenses.
Prof. Bokpin said government needed to address these issues as soon as possible to avert a possible collapse of Ghana’s economy.
“We have been too wasteful, we brought this upon ourselves, we are here because of our actions and inactions,” he said. “[But] we must come to that point where we’ll take charge of our own future, we can’t continue like this,” he added.
“It’s going to be difficult, much more challenging. But of course, there are interventions available to the government in terms of certain cost-cutting measures that we have to do, also to signal confidence in the economy and then also how the revenue envelope responds to the 2022 budget, both at the policy level and the administration and compliance with revenue measures,” he said. Read Full Story
Facebook
Twitter
Pinterest
Instagram
Google+
YouTube
LinkedIn
RSS