Ghana will have to make strict cuts to public expenditure on wages, subsidies, arrears and interest payments
Ghana’s debt situation over the past 3 years has been an issue of grave concern to economist, the Opposition New Patriotic Party and the IMF.
The countries debt to GDP skyrocketed from Ghc 9.5 billion in 2008 to a current figure of Ghc 90 billion in 2015, according figures from the central bank.
This is raising concerns over the country’s debt sustainability efforts.
This and many more economic challenges, like government’s fiscal expenditure issues and a ballooned wage bill.
Just like Greece, and Portugal, who themselves have been rocked with staggering debt crises, Ghana will have to make strict cuts to public expenditure on wages, subsidies, arrears and interest payments.
The question however, is, so far, how is government doing.
The ministry of Finance under Seth Tekper has taken strong decisions this year to cut expenditure on subsidies by rolling out a petroleum deregulation policy which ensures that government is no more paying for fuel subsidies.
Seth Tekper, in an update of Ghana’s financial situation to the press also declared that government had found a better way of dealing with payment of salary arrears and interests.
These successes notwithstanding, government has not reduced borrowing from the domestic markets in treasury bills. Lending to government is still as lucrative as before as the treasury bill interest go as follows, some of the highest in history.:
91 - Day 23.7074% 25.2010%
182 - Day 22.8820% 25.8381%
1 - Yr Note -% 22.5000%
2 - Yr Fixed Rate Note -% 23.0000%
Government has still not gotten a hold of its borrowing. According to the central bank, government has missed its borrowing targets for the first half of 2015by GHC 763 million equivalent of € 195 million, this does not include the $1.8 billion cocoa syndicated loan parliament has just approved, and a $1.5 billion Euro bond now in parliament for approval.
Almost everything shows Ghana is on the same trajectory of Portugal and Greece, but early days yet. Ghana still has its destiny in its own hands, or so it appears.