Have a long-term plan assuring enough to service country’s debt – Government advised

On January 9, 2024, 2:30 PM

Partner at Deloitte Ghana, Yaw Appiah Lartey, wants the government to implement a long-term plan for servicing the country’s debt.

According to him, the country must assure its official creditors that it will not default on its loans after the external debt has been restructured.

Ghana’s official creditors began meeting from January 8, 2024, to discuss the restructuring of approximately $5.4 billion in loans. This marked a critical step toward securing the next tranche of funding from the International Monetary Fund (IMF).

Speaking to Joy Business, Mr Lartey said the process is crucial in regaining investors’ confidence.

“It’s important we have a plan to consolidate all our Eurobonds and all our external debt into what we call a consolidated loan facility or consolidated Eurobond; restructure them and have existing subscribers sign onto it with different terms”.

“So it’s important that we go to the table with the plan that shows that we would be able to service our debt if they sign onto the new plan and also if the external debt holders are taking a haircut, they are taking a haircut with the view that they will redeem their losses”, he explained.

He added that foreign investors cannot take a haircut when the government along the line fails to service the country’s debt.

“You don’t want to take a haircut and then somewhere down the line, the government will be unable to service a new restructured debt.”

To him, the government should go to the table with a plan that is convincing enough to restructure the country’s debt.

“I would propose to the government that we should go to the table with a plan but a plan that is sustainable or a plan assuring enough that we can service our debts in the next few months.”