Economist Professor John Gatsi has advised the government to prioritize stabilizing the cedi, controlling borrowing, and effectively managing the economy to avoid the burden of paying high interest on its debt.
According to him, despite the completion of the Domestic Debt Exchange Program (DDEP), there must be a deliberate effort to manage interest payments to prevent undermining the progress made under the DDEP.
Responding to a report by the Bank of Ghana, which revealed a significant increase in the total amount of interest paid by the government in the first five months of the year, Prof. Gatsi stressed the importance of prudent economic management.
He emphasized that the rising interest payments are a clear indication that Ghana’s debt situation requires more focused attention.
“Even though the Debt Exchange Program was a necessary step to ease the pressure on government finances, the real challenge is ensuring debt sustainability going forward,” Prof. Gatsi said.
He noted that the government’s ability to manage its debt and control borrowing would be critical in achieving this goal.
He also highlighted the need to stabilize the cedi, as fluctuations in the currency can exacerbate debt repayment challenges, particularly for external loans.
“A stable currency is vital for controlling inflation, reducing the cost of imports, and maintaining investor confidence, all of which can help reduce the need for excessive borrowing,” he explained.
Prof. Gatsi further pointed out that any mismanagement of the economy, including unchecked borrowing or poor fiscal discipline, could lead to a vicious cycle of increasing debt and higher interest payments.
He warned that if the government fails to contain these interest payments, it could negate the benefits gained from the DDEP and hinder long-term economic stability.
In conclusion, Prof. Gatsi urged the managers of the economy to focus on achieving debt sustainability through responsible fiscal policies, currency stabilization efforts, and careful borrowing strategies to ensure that the country does not fall back into unsustainable debt levels.
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Story by: Osei Akoto (Teacher Kojo) #Ahotoronline.com
