Be careful of excess borrowing – IMF cautions government

Managing Director of the IMF, Christine Lagarde has warned government against excess borrowing, stating that economic gains achieved by the country could be derailed.
Madam Lagarde is in the country for a two-day visit to complete processes for Ghana’s exiting of the programme with the IMF.

Speaking at a conference organized by her outfit in Accra, the IMF boss said Ghana would have to improve domestic revenue mobilization to fund projects including the Free SHS programme.

“Anybody who says I will do all of it without tax is not telling the real story, it is not popular but it is sensible. I am advocating for the sustainable financial structure that will help education and digital infrastructure so that the country can sustain that growth potential that is there. ”

In 2015, the IMF approved a 918 million dollars three-year Extended Credit Facility to help Ghana boost its economy.

This was at a time when Public debt had risen to an unsustainable pace.

The amount was expected to be paid in eight equal instalments, with the first tranche of 114.75 million dollars paid immediately after the approval.

Ghana is currently waiting for the final disbursement.

Madam Lagarde said Ghana needs to have the right mix between domestic revenue mobilizations to sustain developmental projects.

“My child, your child has to be educated. And for our child to be educated, public money must be invested in order to sustain it. And if it’s only financed by borrowing then you are at risk. At risk from the market, at risk from the desirability for investors to choose Ghana, ” she said.

The IMF programme was also to help restore debt sustainability and macroeconomic stability while protecting government spending.