At the African Union Conference on Debt in Lomé, Togo, on Monday, President John Dramani Mahama spoke to other African leaders and shared lessons learned from Ghana’s debt restructuring experience.
In order to prevent negative economic effects from reactive debt management decisions, he emphasized the significance of openness and prompt communication with creditors.
The president emphasized the significant infrastructure deficit that Africa faces, which calls for yearly investments of between $130 and $170 billion. He pointed out that countries frequently have unmanageable debt loads due to a lack of access to reasonably priced, long-term financing solutions.
Concerning 22 African nations that are in or at high risk of debt trouble, the President cited IMF data. In sub-Saharan Africa, the average public debt-to-GDP ratio is expected to rise from 40% ten years ago to over 60% in 2025, he noted.
President Mahama made reference to Ghana’s past by mentioning the Multilateral Debt Relief Initiative (MDRI) and the Heavily Indebted Poor Countries (HIPC) program, which allowed Ghana to lower its debt-to-GDP ratio from over 100% to less than 30%.
He clarified that this created vital financial room for expenditures in health care, education, and infrastructure.
“Ghana, like many of our peers, has had to undergo painful restructuring to restore macroeconomic stability and rebuild investor confidence,” said President Mahama.
He emphasized how, between the early 2000s and 2015, Ghana strategically used both concessional and non-concessional funding to speed up social inclusion and infrastructural development.
The President explained how, following early gains, unchecked borrowing and other outside shocks caused Ghana’s financial situation to worsen, resulting in a debt-to-GDP ratio that rose from 56.3% in 2016 to a peak of 90.7% in 2022.
He pointed out that by 2023, interest payments alone would account for 47% of all government revenue, a level that the World Bank has determined is fiscally unsustainable.
Source: newsthemegh.com