Economist Dr Priscilla Twumasi-Baffuor urged policy makers to start negotiations with the International Monetary Fund to ensure the country does not revert to the current economic situation.
According to her, the dire economic situation in which the country finds itself is the result of unimproved economic structures and fundamentals that have failed to meet the ever-increasing demands of the country’s fiscal space.
She noted that until policymakers make an effort to adequately address the problem of poor economic fundamentals and structures, the IMF program will do little to improve the current situation.
Speaking on JoyNews’ Newsfile on Saturday, she said: ‘Indeed the structure of the economy is not changing, the fundamentals still remain the same, but it seems like we are still hoping for the best. Rightly so, we should.
“But I believe that policy makers should get to work as we enter this program and also move forward so that indeed this is our 17e time, we do not find ourselves in the situation in which we find ourselves at the moment.
Dr. Twumasi-Baffuor also advised that although debt restructuring is inevitable and may lead to losses, the government must ensure that households are protected from the possible negative effects that may arise as a result of the restructuring.
She said: “So in terms of debt restructuring, the loss could be in the form of the government negotiating with the owners of the debt that they would probably have to reduce the interest rates on the debt.
“Restructuring must be done in a way that households are insulated from any possible negative effects that will occur, and given that the Minister of Finance has also committed to a robust financial sector, we are quite keen to come up with innovative ways of which government would want to restructure domestic debt.
“That could possibly be accompanied by a negotiation in terms of extending the maturities, which is also something that is done. So if your bonds or your Treasury bills are due next month, the government could renegotiate with you to pay in two months and possibly not pay the interest rate at that time.These are all avenues that exist.
“But as we go through all of this, we have to be careful that household incomes are protected, especially as in Ghana we are battling a lot of Ponzi schemes in the financial sector. If people have faith in government and they have invested in government, I believe the responsibility lies with government to protect their savings, and in that regard I’m quite passionate about the component of households, individuals, in terms of who owns the debt in the domestic package,” she added.