The Vice President of the Think Tank IMANI Africa, Bright Simons, says the ruling NPP government would not survive a debt restructuring exercise which they would need to access IMF assistance if the fund finds Ghana’s debt unsustainable.
The IMF is currently undertaking an assessment of Ghana’s debt situation, set to end on October 7th.
It is the next step in the IMF approval process and there is little confidence that the government’s situation would be acceptable.
In that case, drastic measures would have to be taken, including a restructuring of the country’s domestic and external debt.
Debt restructuring would require parliamentary approval and according to Bright Simons, would spell the end of the NPP’s chances for the 2024 elections.
“Restructuring both domestic and external debt ensures the government cannot recover until the next election,” he told Bloomberg News in an interview.
According to him, that would require curbing spending and if they did that “for the next two years and if they did that, they would not be able to win the next election under any circumstance,”
Aside the obvious spending problem, Simons also said building the needed consensus to get Parliament and external societal support would be a herculean task.
“Building consensus at the top of the political pyramid takes time because you have to do all the usual Ghanaian dances,” Bright Simons said. “You have go to traditional leaders, to religious leaders, to the head of the opposition.”
An International Monetary Fund (IMF) staff team, led by Stéphane Roudet, Mission Chief for Ghana, is in Accra holding discussions with the Ghanaian government on policies and reforms that could be supported by an IMF lending arrangement.
The most recent IMF debt sustainability analysis conducted in 2021 found Ghana at a high risk of debt distress and vulnerable to rising debt servicing costs.
Interest costs have climbed since then, Fitch Ratings noted last week when it downgraded Ghana’s debt to CC, a junk status.
Source: theGhanaianVoice.Com