The Chief Executive Officer of Dalex Finance, Ken Thompson, says the level of exposure of Ghana’s economy in the wake of the coronavirus pandemic, should trigger a transformation of the country’s economic structure to make it resilient.
Ghana is still classified at high risk of debt distress with a current debt of 218 billion cedis, representing 63 percent of GDP.
However, the country is set to receive a one-billion-dollar package from the International Monetary Fund, while the World Bank has also approved a 500-million-dollar debt relief for six months due to the shocks caused by the pandemic.
Mr. Ken Thompson says Ghana’s economic fundamentals must change to focus on production else the public debt will continue to grow at unsustainable levels.
“I think that we may get some debt relief. We seem to hang all our efforts on somebody providing us some debt relief. But what are we doing ourselves internally to make the economy better? What efficiency are we creating as a system? You know, I remember the President in his State of the nation address saying that for a long time, we spend 99% of our income on three things – our interest on our loans, our payment to government workers and statutory deductions. What has changed? In any case, another thing too is that, a lot of our debt is commercial debt. We are not going to get relief for that. So, I will rather focus on what we are doing ourselves, to put ourselves in a position to deal with this matter effectively,” he said.
Last month, the Finance Minister Ken Ofori-Atta announced that government was cutting its forecast for economic growth in 2020 to 1.5%, from 6.5%.
But according to the Economist Intelligence Report (EIU), Ghana’s economy will contract by 1% this year, following the novel Coronavirus outbreak.
However, real GDP growth will rebound to an average of 5.7% a year in 2021 to 2024, as the impact of the pandemic fades and oil prices and output recover.
Meanwhile, government has also warned that the outcome could be even lower if the outbreak persists for sometime.
Already, the Finance Committee of Parliament has given clearance to the Minister of Finance, Ken Ofori-Atta, to spend GHS1.2 billion from the Contingency Fund.
The World Bank is also providing $100 million to Ghana to assist the country in tackling the COVID-19 pandemic.
This money will be made available to the government and the people of Ghana as short, medium and long-term support. It includes $35 million in emergency support to help the country provide improved response systems.
The Finance Minister has indicated that the cumulative effect of the novel coronavirus pandemic will cost Ghana GHS9.505 billion.