Finance and tax analyst Nelson Cudjoe Kuagbedzi has urged the government to remain cautious in its borrowing to avoid reversing recent gains in Ghana’s debt sustainability.
His caution follows the International Monetary Fund’s (IMF) upgrade of Ghana’s Debt Sustainability Analysis (DSA) rating from high to moderate risk of debt distress, citing sustained improvements in the country’s debt trajectory, stronger macroeconomic performance and a more stable exchange rate.
Speaking to 3Business in an interview on Ghana’s debt sustainability outlook on August 10, Kuagbedzi said maintaining the debt-to-GDP ratio below 50 per cent indicated that the government’s debt management framework is currently on course.
However, he warned that the improved outlook should not lead to complacency, stressing the need for the government to maintain fiscal discipline and carefully manage new borrowing to prevent the debt burden from rising again.
“We cannot discount the caution given by the IMF because the external vulnerabilities, most especially the geopolitical tensions, the renewed depreciation of the cedi and the legacy issues in the energy sector still remain significant risks as far as our debt issues are concerned,” he said.
The finance and tax analyst further urged the government to tread cautiously in contracting new loans to avoid worsening the country’s debt profile.
“We believe that government should tread cautiously so as not to shoot up the debt profile. Even though government has gone in for a few credit facilities, we still expect those credit facilities not to have any significant impact on the debt portfolio” he said.
Nelson Cudjoe Kuagbedzi concluded that, “we still expect that the debt-to-GDP ratio will remain below 50 per cent by the end of 2026,”
By Coffie Mawuedem Noel
