Former Finance Minister, Seth Terkper, has expressed optimism regarding Ghana’s potential to secure a waiver from official creditors, facilitating the approval of a third tranche of US$360 million for the nation.
Mr Terkper, who led Ghana’s 16th International Monetary Fund (IMF) loan-support program in 2015, acknowledged the challenges but remained hopeful, stating, “it may be difficult, though not impossible to secure another waiver because these are major waivers.”
He shared his insights during a virtual media briefing on April 26, highlighting the ongoing program’s dynamics.
While Ghana has reached an interim agreement with its official creditors, the signing of a Memorandum of Understanding (MoU) for debt treatment remains pending.
However, Mr Terkper clarified that the MoU isn’t a prerequisite for the third tranche disbursement, although the Fund stresses the importance of a deal with official creditors.
Mr Terkper’s confidence stems from Ghana’s past success in securing waivers from key creditors like France and China, crucial for previous loan-support approvals.
He urged the government to take proactive steps to build sufficient buffers for debt repayment and mitigate further accumulation.
Highlighting the importance of fiscal prudence, Mr Terkper emphasized the need to allocate funds for debt repayment amidst revenue constraints, warning against a mirage of debt reduction without such measures.
He underscored the challenges ahead, pointing to revenue projections and expenditure dynamics under the program.
He attributed uncertainties to delays in the completion of the Integrated Tax Administration System (ITAS) and the program’s modest goals in increasing the tax-to-GDP ratio.
Mr Terkper recommended Ghana to establish a credible debt repayment mechanism, such as a Sinking Fund, to address fiscal challenges effectively.
Additionally, he advised leveraging the Energy Sector Recovery Act (ESLA) to settle Independent Power Producers (IPP) debts while maintaining fiscal discipline to curb government expenditure.