Dr Maxwell Opoku-Afari
MAXWELL Opoku-Afari, First Deputy Governor of the Bank of Ghana (BoG), has indicated that though access to external financing has facilitated the execution of critical infrastructural projects and helped to expand the frontiers of growth in Ghana, it has also complicated macroeconomic management and increased vulnerabilities.
Dr. Opoku-Afari, who was speaking recently at a virtual Center For Global Development (CGD) conference on a Debt Sustainability Panel on the theme, ‘Financing Low-Income Countries: Towards Realistic Aspirations and Concrete Actions in a Post-Covid-19 World’ said, “The relatively complex structure of the Ghanaian debt stock requires that debt management should include regular access to domestic market (with an eye on non-resident investors), regular access to the international capital market, maintaining a stable exchange rate and inflation, sustaining real sector growth at a rate enough to pay down existing debt, and minimizing the interest cost on the various components of the public debt stock.”
According to him, for frontier economies like Ghana debt sustainability and growth had become the most critical policy anchor underpinning macroeconomic management.
He said Ghana had opted for the clear path that required maintenance of sound macroeconomic fundamentals that would ensure market access at least cost, and while at the same time engaging the attention of non-residents at the longer end of the domestic market.
Commenting on how the international community could work together to help countries get through the current debt, he said the Debt Service Suspension Initiative (DSSI) or even calls for debt cancelation could provide enormous relief to countries to deal with the current debt challenges.
“Nonetheless, there are major risks. These include the signal it sends to the market about credit worthiness, the potential loss of market access in the medium to long-term, the possibility of raising the cost of external finances and the risk of moral hazard.
“Importantly, while efforts at mobilizing subsidised funds to support emerging economies is a welcome one, a more enduring support should include correcting the narratives of our economies in the international discourse space, highlighting the opportunities for growth above the global average, encouraging investor interest in impactful infrastructural projects that would enable our economies to expand capacity and generate higher sustainable and equitable growth,” he said.
He additionally called for ways to strengthen and implement reforms aimed at dismantling bottlenecks in domestic revenue mobilization and administration.
BY Samuel Boadi