Dr Duffuor: "DDEP Not Panacea For Economic Revival."
The domestic debt exchange programme (DDEP), according to former finance minister Dr Kwabena Duffuor, is not a magic fix for the nation's faltering economy.
He believed that debt relief was simply a part of the fiscal toolkit required to repair such a failing economy and could not be utilised to spur economic growth.
"The debt management programme is but one instrument in the financial toolbox. If you don't tie the debt exchange programme to a sharp decline in inflation, bank lending rates, and the size of the government, you can't utilise it to spur economic recovery, he added.
extravagant expenditures
Dr Duffuor stated that the problem facing the nation was the excessive spending on interest payments, which had been caused by a high level of government borrowing, in a conversation with a few media yesterday at his office in Accra.
Because of interest payments, he claimed, "we spend too much on servicing debt. If we don't take steps to ensure the interest cost does not grow again, then we will be back at square one and this debt treatment will offer no results."
Even though debt relief would provide the nation breathing room, Dr Duffuor, a former governor of the Bank of Ghana, said urgent measures must be done to guarantee that the economy's fundamentals improved.
It involves, among other things, manageable debt levels, low-interest rates, such as the policy rate, low inflation, little or little fiscal deficit, and a large number of foreign reserves.
Adding that "as an economist, it is not like we are against the debt treatment since we saw it coming, but how the whole exercise is being carried out is not correct," he said that the administration has made the country's condition worse.
According to the former governor, "It has seriously undermined investor confidence, and that will have an effect on economic development."
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