Economist, Prof. Peter Quartey believes government's suspension of foreign debt payments gives a chance for administrators of the economy to reflect on the country's excessive borrowings.
"I think we should learn and draw lessons from this; that we shouldn't continue borrowing as if there is no tomorrow. We need to take a vacation once we reach the 50 to 60 percent GDP ratio. "We need a buffer so that if there is a shock, you can borrow and cushion yourself and get out of the situation," he stated on Eyewitness News.
All foreign debt payments have been halted by the government pending an orderly adjustment of the impacted liabilities.
The Finance Ministry stated in a statement on Monday, December 19, that the suspension will encompass payments on the country's Eurobonds, commercial term loans, and the majority of the country's bilateral debt.
The suspension, however, would not affect payments on Ghana's multilateral debt, new loans (whether multilateral or otherwise) committed after December 19, 2022, or debts relating to specific short-term trade facilities, according to the statement.
However, Prof. Quartey, who is also the Director of the Institute of Statistical, Social, and Economic Research (ISSER), believes that the current scenario should be used as a learning tool because of the repercussions on currency depreciation and inflation.
"We borrow to the brim and when we were confronted with this triple shock, there was no way out. That is why we saw our currency collapsing and inflation soaring. Lessons must be drawn from this."
He also recommends that, the suspension of all external debt service payments if handled properly, however, might increase Ghana's credibility on the international market.
"For the International market, it will take some time for Ghana to restore the reputation it was previous to COVID-19. If we can get into the IMF program and do the right things, such as managing our debt threshold and not overspending, we will be able to obtain additional funding in the future."