Governor of the Bank of Ghana (BoG) Dr Ernest Addison has reiterated the point by the Finance Minister Ken Ofori-Atta that the government was not in a haste to return to the capital market to borrow after the $3billion programme was approved by the International Monetary Fund (IMF).
Answering questions at the 112th Monetary Policy Committee (MPC) press conference in Accra on Monday May 22, Dr Addison said the country needed to rebuild its credit worthiness and get the rating agencies to give the country good classifications.
“That is true, you need to build your credit worthiness and get the rating agencies to reclassify at a rate that will allow you to borrow,” he said.
Earlier, the Finance Minister indicated that there was no rush on the part of the government to return to the international capital market to borrow following the coming on board the $3billion bailout from the Fund.
He said during a joint Ghana-IMF press conference in Washington on Thursday, May 18 when asked a question about Ghana returning to the capital market that “In addition to the revenue measures that we saw in the budget that are improving at GRA and that will give us the resource to move forward, curtailing and managing our expenditures are going to be important.
“There is no rush in going back to the international capital market, our expectation is that in managing our expenditure and increasing our revenue we will have the resources to do it. Working towards the capital market is important because we want to get our ratings up and make the country more attractive for investors, especially FDIs. So no one is rushing to the capital market at this juncture.”
Following the approval of the deal, analysts cautioned the government against borrowing.
For instance, the Director of the Institue of Statistical, Social and Economic Research (ISSER) of the University of Ghana, Professor Peter Quartey said the government must be slow in borrowing, especially during periods when there are no shocks such as Covid and the Russia-Ukraine war.
Speaking on TV3 while reacting to the approval Prof Quartey indicated that the bailout will provide some respite in the short term but the government must leverage on the immediate benefits to correct the defects in the economy for long-term benefits.
He noted that successive governments overspend in election years as though there is no tomorrow and then try to use the next two or three years after the elections to clean up the system.
This trend, he said, must stop in order to reduce the dependency on external bodies for survival as a country.
“Of course, the unexpected may happen, and shocks may happen or may occur, we have seen Covid come, we have seen Russia Ukraine war, it is not the end of such external shocks any of them can come again. So we need to have some cushion, we don’t have to borrow too much.
“When we are hit with a pandemic or any external shocks then we can borrow to cushion ourselves and get out of the problem but if we borrow to the brim and we are hit with the shock that is where we are found wanting.”