The Institute of Economic Affairs (IEA) is urging the government to ensure the current debt crisis does not lead to a banking crisis.

It, therefore, wants the Bank of Ghana to allow banks and other financial institutions affected by the DDEP to delay recognizing the full extent of the losses in their loss provision to avoid insolvencies of banks and other financial institutions.

Among many other measures, the IEA also wants the government to implement complete structural reforms to make the economy resilient to both internal and external shocks.

“These reforms must be based on broad-based national development plan that ensures sectoral realignments and interconnectivity to improve productivity and increase government revenue. This will reduce budget deficits, borrowing, and eliminate the chaotic development and implementation of industrialization programmes in Ghana”, it stressed.

Within the overall reforms, the policy and economic think tank said there must be an industrialisation strategy based on natural resources and an agriculture transformation agenda, adding, this calls for a change in the current natural resource fiscal regime to one that ensures that Ghana will obtain its fair share of revenues generated from natural resource activities within the country.

“The industrialisation strategy must also address the import dependency problem and increase the complexity of exports to earn more foreign exchange”, it continued.

To promote macroeconomic stability for growth and debt sustainability, the IEA urged the government should follow some fiscal and monetary rules that will serve as anchors for the conduct of fiscal and monetary policies.

“This calls for the enforcement of the Fiscal Responsibility Act, 2018, which states that fiscal deficit shall not exceed 5% of GDP, and the BOG Act 2002 (Act. 612) amendment, which states that total loans to the government shall not at any time exceed 5% of the total revenue of the previous fiscal year”, it concluded.