Borrowing Spree: Akufo-Addo Gov’t was under “misguided delusion” of being able to repay – Financial Expert
Already, the government is looking to restructure approximately $2.7 billion in pension funds held by organized labor unions.
A Financial Consultant and Lead Executive Coach at Crescendo Consult Ltd, Doris Ahiate, has strongly criticized the Government for embarking on an extensive borrowing spree, resulting in unsustainable debt levels and the need for a domestic debt restructuring programme.
Speaking during the NorvanReports and Economic Governance Platform Twitter Space Conversation titled “Restructuring Of Domestic Bonds, Where Do We Go From Here,” on Sunday, Ahiate expressed her dismay at the government’s misguided delusion that it could continue borrowing and easily repay the debts, likening it to a ponzi scheme.
Ahiate highlighted that the government had been spending well beyond its sustainable capacity, driven by the false notion that it could accumulate debt and effortlessly repay it. However, she asserted that the global markets, which had previously supported Ghana’s borrowing, have become wary and cautious about the sustainability of the mounting debt levels.
Ahiate remarked, “It was more like a ponzi scheme we were running, but we have come to a point where the global markets that supported us with the borrowing have become wary and are mindful of the sustainability of the levels that our debts have accrued to and are not willing to play ball anymore.”
According to Ahiate, the process of restructuring domestic bonds is not yet complete, and she expects the government to undertake a second round of restructuring due to resistance from external creditors, despite the country’s participation in an International Monetary Fund (IMF) programme.
She noted that external investors are reluctant to support Ghana through the restructuring process, indicating that the challenges are far from over.
Already, the government is looking to restructure approximately $2.7 billion in pension funds held by organized labor unions.
Ahiate emphasized that in order to achieve debt sustainability and avoid another round of restructuring, the government must rationalize its expenditure. Failing to do so, she warned, would be akin to “plugging a deep hole with small grains.”
Ahiate’s critical assessment sheds light on the pressing need for the government to address its borrowing practices, reassess its spending habits, and strive for sustainable debt management to navigate the present economic challenges.
Source: Norvanreports
