Mr. Seth Terkper, former Finance Minister, has called on the current Finance Minister to provide further details regarding the GHS 77.6 billion cedis ($7 billion) owed to the Bank of Ghana, which the government has reportedly written off.
In a series of tweets, Mr. Terkper emphasized the significance of the figure, which appears to be crucial in recent fiscal management from 2022 to the present. He expressed anticipation for the Mid-Year Review (MYR) to shed light on the matter and provide some clues regarding the debt.
Drawing attention to the Budget Review Report for 2022, Mr. Terkper highlighted a steep decline of about GHS 37 billion in “arrears.” He pointed out that this reduction was not due to actual payment but rather the addition of about US$3.3 billion (approximately GHS 36.9 billion at an exchange rate of $1=11.2) of “arrears” to the Domestic Public Debt, as per the IMF Program report.
Furthermore, Mr. Terkper mentioned that the ESLA (Energy Sector Levy Act) was intended to settle some of these arrears, and some suppliers and contractors received government bonds as part of the process. He stressed the importance of waiting for the MYR to obtain answers and better understand the intricacies of the situation.
According to Reuters, Ghana’s government has written off half of the GHS 77.6 billion owed to the central bank and replaced the remaining debt with a lower-yielding, 15-year bond. This action is part of the country’s efforts to restructure its domestic debt, a requirement to qualify for the next tranche of a $3 billion International Monetary Fund (IMF) rescue loan. Ghana is now focusing on negotiations with external creditors.
The domestic debt restructuring, including debt owed to independent power producers and the central bank, is a multi-faceted process involving various financial instruments, including domestic U.S. dollar bonds, cocoa bills, and pension funds. The central bank, despite wanting to be excluded, had to be included as per the IMF’s requirement for achieving debt restructuring targets.
With the situation evolving, stakeholders await the government’s detailed explanation during the Mid-Year Review, which is expected to shed light on the complex restructuring of domestic debt and its implications for the country’s financial landscape.