Mr. Seth Terkper, former Finance Minister and current Executive Director of the consulting firm Public Financial Management (PFM) Tax Africa Network, has expressed confidence in Ghana's ability to secure a waiver from official creditors to support the approval of a third tranche of US$360 million for the country.
Speaking at a virtual media briefing, Mr. Terkper, who led Ghana's 16th International Monetary Fund (IMF) loan-support program in 2015, acknowledged the challenges but emphasized the possibility of obtaining another waiver. He highlighted the significance of securing such waivers and the importance of ensuring fiscal targets are met.
Ghana has reached an interim agreement with its official creditors, although the Memorandum of Understanding (MoU) for Debt treatment aligned with the program's parameters is yet to be signed. Mr. Terkper clarified that while the MoU isn't a prerequisite for the third tranche disbursement, reaching a deal with official creditors remains crucial, as emphasized by the IMF.
Optimism surrounds Ghana's previous successes in securing waivers from France and China, crucial steps in obtaining the current loan-support program. Mr. Terkper stressed the need for the government to take bold measures to create adequate buffers for Debt Repayment and reduce debt accumulation.
The former Finance Minister highlighted revenue projections and expenditure patterns, emphasizing the necessity of setting aside funds for debt repayment amidst uncertain revenue growth. He underscored the importance of Ghana's domestic tax system and recommended the establishment of a credible debt repayment mechanism, such as a Sinking Fund.
Additionally, Mr. Terkper urged the government to utilize the Energy Sector Recovery Act (ESLA) to settle Independent Power Producers (IPP) debts, ensuring adherence to the zero financing of government expenditure by the Bank of Ghana.
Overall, Mr. Terkper's remarks underscore the challenges and opportunities ahead for Ghana in its quest for debt sustainability and economic resilience, emphasizing the importance of proactive fiscal measures and strategic financial management.
