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Hot debate President Mahama challenges IMF's Ghana HIPC tag

The president dismissed suggestions that Ghana is highly indebted, explaining a misunderstanding of an agreement with the IMF had led to that erroneous idea that the country was knee-deep in debt.

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President John Dramani Mahama play

President John Dramani Mahama

President John Mahama has dismissed suggestions that Ghana is highly indebted, explaining a misunderstanding of an agreement with the IMF had led to that erroneous idea  that the country was knee-deep in debt.

Related: > Debt Woes IMF decries high Eurobond interest rate, says it's unfortunate

“We have a debt ceiling with the IMF and it was mistaken to mean that we are highly indebted. In the new calculation of our public debt and all the debt of state-owned enterprises have been added to the public debt. It didn’t use to be so, formerly you calculate the debt the country owes separately from state-owned enterprises”, he explained on Monday.

Related: > Economists' Corner Ghana’s 2015 Eurobond; Overview, prospects and challenges

An IMF report suggested that the IMF had categorized Ghana into the class of countries that had reached HIPC status because of their heavy indebtedness.

Subsequent media reportage have driven the president to react to theses assertions

Speaking to a gathering in the Central Region, President Mahama said the country was rather making economic gains.

Related: > Debt Management IMF entices Ghana to go HIPC

“We are increasing revenue but at the same time we are holding expenditure. We are not reducing expenditure, we are holding it down so that revenue can catch up and exceed expenditure,” he said.

The International Monetary Fund (IMF) has described as unfortunate the 10.75 percent yields government accepted on the $1 billion Eurobond issued recently.

Last week, the Finance Ministry announced at the end of the Eurobond road show that it has secured a $1 billion facility with a 15-year maturity period at a coupon rate of 10.75 percent, amidst concerns that the facility is costly.

In an emailed response, a spokesperson of the IMF said: "An important element of Ghana's IMF-supported programme is strong fiscal adjustment, underpinned by fundamental reforms, to restore macroeconomic stability".

According to him, restoring macroeconomic stability is a key thing that will ensure the country's debt remains sustainable.

 

 

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