Finance and tax analyst Nelson Cudjoe Kuagbedzi is cautioning government against returning to unsustainable borrowing, warning that the successful completion of Ghana’s external debt restructuring will count for little unless it is backed by prudent debt management and sustained fiscal discipline.
He argues that while the country has finally drawn the curtain on one of its most painful fiscal recovery programmes, preserving the gains will require successive governments to resist the temptation of excessive borrowing that culminated in the Domestic Debt Exchange Programme and external debt restructuring.
Speaking to Citi Business News, Kuagbedzi said the completion of the debt exchange should mark the beginning not the end of Ghana’s commitment to responsible fiscal management.
“Going forward, prudent debt management coupled with sustained macroeconomic gains must be our watchword. We must not go back to the days of unsustainable debts and domestic debt exchange program.”
The caution follows government’s announcement that it had successfully exchanged the outstanding
SADEREA Notes-the final component of Ghana’s sovereign bonded debt restructuring bringing to a close a debt workout that began after the country’s 2022 debt crisis and years of negotiations with domestic and external creditors.
Kuagbedzi described the conclusion of the restructuring as a significant milestone for Ghana’s capital market.
“Well, I think this is the end of a very painful journey that has touched the soul and heart of many Ghanaians, most especially those of us who play within Ghana’s capital market. But then we have to first of all commend and give credit to the Finance Minister and the Governor of Bank of Ghana, Dr Johnson Asiama, for their coordinated effort in bringing this painful journey to an end.”
He believes the successful completion of the exchange should also improve Ghana’s standing with international investors and support the country’s efforts to regain stronger access to global capital markets.
“Currently, we are rated B- with positive outlook. And so we expect this exchange to once again enhance our credit worthiness and by extension enhance our credit ratings.”
According to him, government’s consistent commitment to meeting its debt obligations has already begun rebuilding confidence among market participants.
“Additionally, government has demonstrated enough commitment in unrelenting debt obligation. And so we expect this to boost and deepen investor confidence within Ghana’s capital market.”
Kuagbedzi also expressed confidence that improvements in governance and fiscal oversight will help ensure Ghana does not repeat the mistakes that led to the debt crisis.
“I can tell you for a fact that the control environment, the ethical leadership and the tone at the top has given we market players enough assurance that we will not get back to the days of unsustainable debt.”
