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Debt Analysis Ghana's HIPC situation not exactly bad- Dr. Mensah

" Everyone borrows. In fact, check the debt to GDP ratio of most of the G8 nations, their debt to GDP ratio is above 70 percent.

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Minister of Finance,  Seth Tekper play

Minister of Finance, Seth Tekper

Economists and financial analysts are divided over the implications of Ghana's escalating debt and the corresponding debt to GDP ratio.

The Bank of Ghana, Monday, revealed the country's total public debt had increased from GHC90 billion to GHC94 billion, and the debt to GDP ratio increased from 64 per cent to 70.4 per cent to GDP.

This has sparked a sense of apprehension in the economy, with some analysts asserting that the country had hit the Highly Indebted Poor Country- HIPC  status with its debt. The governor of the Central Bank has since come to correct that impression, saying going HIPC is not automatic, adding that it  has to be a deliberate decision by government to acquire the HIPC status.

Meanwhile, other expects are downplaying the implications of Ghana's debt hitting a 70.4 per cent of GDP.

Head of research at major  banking and investment firm, Groupe Ndoum, Samuel Ampah on Radio Univers' business analysis Show, Business Trendz, says the fact that debt to GDP ratio has hit 70.4 per cent is not in itself a problem.

" Every country borrows. The borrowing is not a problem. The actual problem is what the monies are used for. If we borrow, and use them for social programs geared towards winning elections, the monies will not be paid back easily, and that's the source of concern."

Mr. Ampah addressed that concerns about government borrowing to pay back old debt.

" There's nothing wrong with that, if government is borrowing long term debt to retire maturing short-term debt. What that means is government gets more time to put its act together to redeem the long term debt"

Lecturer of Banking and Finance at the University of Ghana Business School, Dr. Laud Mensah also believes that government's debt to GDP ratio is not exactly a matter of concern.

" Everyone borrows. In fact, check the debt to GDP ratio of most of the G8 nations, their debt to GDP ratio is above 70 percent. No one is crying about it because, they have clear systems in place to redeem those debts. They use the monies for commercially viable projects that will ensure that the monies are paid back."

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