Zambia's Minister of Finance and National Planning, Mr Situmbeko Musokotwane, has recommended Ghana to enact debt-limitation legislation.
"We passed legislation in Parliament that tied my hands and said, going forward, you can't be like those in the past." So we tied our hands in order for Parliament to have more power and borrowing constraints," he explained.
This should be accompanied with changes to retain trust with creditors, the international community, and citizens, as well as to foster private sector investment for value creation.
He expressed optimism that such action would expedite the debt-relief process, improve the economy, generate domestic revenue, create more jobs, raise people's living standards, and help avoid future debt crises.
Minister Musokotwane stated this while sharing the experience of Zambian authorities, who concluded a Memorandum of Understanding (MoU) with its Official Creditors on the restructuring of about US$6.3 billion debt on Saturday, October 14, 2023.
Zambia, the first African country to default on its debt during the COVID-19 epidemic, achieved an agreement in principle in June and is currently awaiting the signing of a Memorandum of Understanding for debt restructuring.
He addressed during the African Finance Ministers press conference on the sidelines of the International Monetary Fund (IMF)/World Bank Group (WBG) Annual Meetings on Saturday, October 14, 2023, in Marrakech.
He explained that it was critical for the country to adopt sensible measures to avoid incurring large debts by implementing strong structural and long-term reforms while investing in education, healthcare, infrastructure, and industrialization.
"To get the support of the international community - lenders and other people, obviously, must conclude that you're worthy of their support, and willing to take steps to assist yourself," he said.
"We've learned a lot, and for people like you [Ghana], you've been lucky," Mr Musokotwane added, referring to Ghana's ability to get foreign creditors' assurances and an IMF program in five months.
Ghana, for example, has a budget Responsibility Act, 2018 (Act 982), which compels the government not to spend over a threshold that would drive the budget deficit above 5% of GDP.
However, it was halted in 2020, following the onset of the COVID-19 pandemic, because the government anticipated failing to reach the 5% deficit target.
Meanwhile, the Ministry of Finance and the Bank of Ghana (BoG) have signed a Memorandum of Understanding (MoU) providing for zero monetary financing throughout Ghana's US$3 billion loan-support program with the IMF.
Meanwhile, Ghana's economic growth averaged 3.2 percent in the first two quarters of 2023, which Dr. Ernest Addison, Governor of the Bank of Ghana, warned would force the government to "operate without access to central bank financing."
0 Comments