Ghana is at high risk of debt distress and has agreed on a debt management strategy with the International Monetary Fund (IMF), finance minister Kenneth Ofori-Atta said on Thursday.
Ofori-Atta is in the middle of negotiating a relief package with the IMF as the West African country faces its worst economic crisis in a generation.
“The current debt sustainability analysis conducted reveals that Ghana is now considered to be in high risk of debt distress,” the minister told lawmakers during his presentation of the 2023 budget.
“Government and the IMF have agreed on programme objectives, a preliminary fiscal adjustment path, debt strategy and financing required for the programme,” he said, adding he hopes to reach a deal “very soon”.
The depreciation of the Ghanaian cedi was “seriously affecting” the country’s ability to manage its public debt, which has increased to $48.9bn this year, he told parliamentarians, saying the currency has lost more than 50 percent of its value.
“Our stock of debt has increased by 93 billion Ghana cedis ($7bn) this year alone due to the depreciation of the cedi since the beginning of 2022.”
Ghana will implement a debt exchange programme to address the challenges, he said.
Economic growth is expected to slow to 3.7 percent of gross domestic product (GDP) in 2022 from 6.7 percent last year, and to slow further to 2.8 percent in 2023, he said.
Ofori-Atta has faced calls for dismissal from both the governing party and opposition who accuse him of economic mismanagement. Last week, he apologised for the country’s economic hardship but defended himself against their claims.
“I acknowledge our economy is facing difficulties and the people of Ghana are enduring hardships,” he said last Friday. “As the person President Akufo-Addo has put in charge of this economy, I feel the pain personally, professionally, and in my soul.”
On Thursday, Ofori-Atta said Ghana would impose a debt limit on non-concessional financing among other reforms, and will focus on using monetary policy to control inflation, which has exceeded 40 percent.
The government will freeze new tax waivers for foreign companies and review tax exemptions for mining, oil and gas companies. It will also freeze hiring for civil and public servants, he said.
However, Ofori-Atta did not offer any cuts to spending on flagship programmes, and detailed a swath of infrastructure project expansions such as road expansion.