Ghana’s public finances are deteriorating very fast. At the root of the present difficulties is a fiscal policy characterized by weak domestic revenue mobilization and rapid expenditure growth driven by budgetary rigidities and new spending programs. This type of fiscal policy that has been pursued for nearly a decade now has produced huge deficits and a rapid debt build-up, causing a sharp and persistent increase in debt service spending which is currently weighing down the nation’s finances.
If there was any doubt about this fact before, there can be none now given recent developments concerning Ghana’s sovereign bonds and international investors’ assessment of the country’s creditworthiness. According to international investors, Ghana’s sovereign bond prices have fallen sharply since the turn of the year, recording the worst performance among emerging market bonds. Falling bond prices imply rising bond yields, which simply means investors are demanding higher interest rates to hold Ghana’s bonds or lend fresh money to the country. Thus, Ghana’s sovereign debt is “considered distressed”, with investors losing confidence in the government’s ability to restore the public finances to a stronger footing.
Source: Dr. Kwabena Duffuor
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I'm really overwhelmed by this piece, especially when I know it is coming from an NDC cohort. It's not usual to have a constructive critique from the NDC, whose trademark is deceptive, trivial, and baseless propaganda meant only to garner votes. If you listen to the honorable finance minister, Ken Ofori-Ata, he accepts that there are challenges that need to be solved only when we can think outside the box, getting away from the folly of doing the same thing over and over again without good results since our independence. The e-levy is one of the innovative ways in which, with the benefit of the current technological state, we can leapfrog to enlarge our tax net. Further, I don't believe that prudent investments have not been made with the funds borrowed. The Ghana beyond aid policy-elements like FSHS, 1D1F, planting for food and the digitalization agenda are all good policies to transform the economy. There are indeed challenges, COVID and what not, but at the end of the day, what counts is what the NPP-administration is doing to keep the mother Ghana on course. I had wished that Dr. Duffour had cited some policies he would have implemented to keep Ghana on course. After all, he can't ignore the current situation if he happens to take over the reigns of Afairs.