US-based Associate Professor of Finance at Andrews University in Michigan, Professor Williams Peprah, is advising government to cut its expenditure drastically to help slowdown domestic borrowing and consequently stall the rising debt levl.

Ghana’s debt stood at ¢575 billion at the end of November 2022, fueled by the depreciation of the cedi. The external debt component stood at $29.2 billion, about ¢382.7 billion in November 2022, compared with $28.4 billion, approximately ¢271.7 billion in September 2022.

Professor Peprah urged government to immediately get the external debt holders to agree to the debt exchange programme to halt rising external debt.

According to him, failure to do so will still keep the debt very high and will be challenging for the economy.

He told Joy Business the present situation is worry despite a significant progress in the domestic exchange programme.

“The Bank of Ghana’s report [January 2023 Summary of Economic and Financial Data] which indicates that Ghana’s debt currently stands at ¢575 billion as of November 2022 is very troubling and really needs attention as to how a solution can be found”

“We have noticed that though there was no addition to the external debt, the cedi depreciation alone cost a 37% increase to that portfolio. And this really means that the government has to immediately get the external debt lenders to come to the table and agree to the Debt Exchange Programme that government has put in place before them”, he added.

Furthermore, Dr. Peprah warned that the country’s debt will not go down anytime soon in the long term because the government is borrowing heavily on the treasury market.

“In the long term, we are not going to see our debt position being reduce because we have noticed that government is still borrowing heavily from the treasury market which is also going to increase the domestic debt. To us, government must try to reduce the domestic debt from the bond side [market]”.

“It also requires government to make sure that it reduces expenditure drastically to also have an impact on the borrowing. Continuous borrowing is going to be a major challenge going forward as we see the debt creating inflation risk etc", he added.