World Bank Country Director for Ghana, Liberia, and Sierra Leone, Mr. Pierre Laporte, has warned that Ghana needs to act urgently to stem current challenges in the economy which threaten to pull down the economy.
In an interview by Accra based 3News, Mr. Laporte cites the depreciation of the cedi as particularly pernicious along with inflation, saying these could make debt restructuring difficult.
“There is an urgency, Ghana needs to tackle these problems with urgency. What is happening in the few months is that inflation has gone up partly because of what is happening upside but also partly because the currency has depreciated,” he said according to 3news reports.
He pointed out that since banks depend on government bonds and securities, a further dip in the economy’s capital adequacy will have grave effects on the country.
“From where I sit, if nothing happens it will be very difficult for Ghana to find another way-out, domestic debt structuring is very difficult. Why? Because typically banks will invest in government papers, bonds and when you ask banks to care of stuff like that it affects the capital adequacy and it puts at risk these banks whereby international debt is easier to reschedule or restructure,” he said.
Ghana is already starting a program with the IMF after the Aufo-Addo government plunged the economy into a mess with overborrowing.
As part of the IMF program, there is talk about restructuring Ghana’s debt but the IMF has indicated whatever restructuring will take place will be informed by what comes out of an assessment of the economy.