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Policymakers must ensure Ghana does not return to current economic situation – Dr. Twumasi-Baffuor

Dr. Priscilla Twumasi-Baffuor, an economist, has urged officials to start talks with the International Monetary Fund so that the nation’s economy does not revert to its pre-crisis state.

She claims that the country’s poor economic circumstances are due to outdated economic fundamentals and structures that have been unable to keep up with the country’s ever-increasing fiscal space demands.

She pointed out that the IMF program will not significantly improve the existing situation until policymakers make an effort to adequately address the problem of weak fundamentals and economic structures.

She remarked, “In fact, the structure of the economy is not changing; the fundamentals continually remain the same, but it looks that we consistently expect for the better.” in an interview with JoyNews’ Newsfile on Saturday. We ought to, of course.

However, I think that policymakers should start working as soon as we start this program and going forward so that even though this is the 17th time, we don’t end ourselves in the predicament we are in right now.

In addition, Dr. Twumasi-Baffuor counseled that although debt restructuring is unavoidable and can result in losses, the government must make sure that households are protected from any unfavorable consequences that might arise.

“So in terms of debt restructuring, the loss may come in the form of government negotiations with debt owners, who would likely have to lower debt interest rates,” she said.

“The restructuring should be carried out in a way that protects households from any potential negative effects, and given that the Finance Minister has also pledged to maintain a strong financial system, we are eager to present the creative ways in which the government would like to restructure the domestic debt.

“It can be accompanied by a dialogue over the extension of maturities, which is something that is also done. Therefore, if your bonds or treasury bills are due the next month, the government may renegotiate with you to extend the payment deadline to two months and maybe waive the interest charge. These are all available options.

However, we must take care to preserve household incomes while we work through all of this, especially in light of the fact that Ghana struggles with a large number of Ponzi schemes in the financial sector. For that issue, I’m fairly passionate about the households component, individuals, in terms of who are the owners of the debt in the domestic bundle. If people have faith in government and have invested in it, I believe that it has a duty to protect their investments.

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