Vice President of IMANI Africa, Bright Simons says Ghana’s economic situation may worsen if the government does not manage its debt restructuring effectively.
Speaking on Ghana’s Debt Restructuring Forum organized by Citi TV/Citi FM in collaboration with ACEP and IMANI Africa, on the theme, Ghana’s Debt Saga: Now, What Next? Bright Simons mentioned some reasons that could continually lead Ghana to the International Monetary Fund (IMF) for a bailout.
“Usually, if a country does not treat investors well, the two things that happen are that your cost of borrowing goes up because investors now assume that you are risky, so they charge more. So you can take a country like Argentina which is a serial defaulter. Because it is a serial defaulter, countries just simply increase the amount of interest that they demand. And secondly, you become more and more reliant on bailouts. So if you look at Argentina’s last situation, they have to go to the IMF for as much as $57 billion because nobody on the international market will lend them money unless the IMF gave them huge money. So I suspect that if we are not careful, two things will happen. One is that post-restructuring, the cost of borrowing will keep going up. So treasury bills will not fall. And we will become more likely to go to the IMF for additional ECF and EFF programs,” he said.
“So if government does not manage the debt restructuring effectively, it will worsen the situation next year and the year after.”
Ghana reached a staff level agreement with the IMF to receive monetary support of $3 billion in December 2022.