UCC Don condemns unilateral suspension of external debt payment

Story: Reuben Sackey

The Dean of the School of Business at the University of Cape Coast (UCC), Prof. John Gatsi has described the government’s unilateral decision to suspend external debt payments as dangerous and one that can hurt the country’s creditworthiness.

The Finance Minister, Ken Ofori-Atta, on Monday, December 19,  2022, said the suspension of external debts would l include the payments on Ghana’s Eurobonds; commercial term loans; and most of the country’s bilateral debt.

The suspension, according to Mr Ofori-Atta would , however, not affect the payments of Ghana’s multilateral debt, new debts (whether multilateral or otherwise) contracted after 19th December 2022 or debts related to certain short-term trade facilities.

“We are also evaluating certain specific debts related to projects with the highest socio-economic impact for Ghana which may have to be excluded. This suspension is an interim emergency measure pending future agreements with all relevant creditors,” parts of a statement issued by the Ministry of Finance read.

Sharing his view on the issue on Citi News , Prof. Gatsi said the government should have engaged their external creditors before taking the decision to suspend the payments.

He admonished the government to handle the external debt payment suspension with tact and proper stakeholder engagement or external creditors will shun Ghana.

“You need to negotiate with them [external creditors] for them to accept your position so that it becomes normal. If you don’t engage your creditors it appears you assume you are in an upper position and that is where the whole problem is.

“It shouldn’t be unilateral at all…if you simply cannot pay, you need to engage the debt holders because the agreement is such that whether you have money or not you need to pay, if you cannot pay you negotiate.”

Professor Gatsi added that the external creditors could  take legal action against Ghana’s government if they reject the suspension of the external payment.

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