Adnan Adams Mohammed
As government of Ghana looks for sustainable way to manage its debt, it has been urged to strengthen its industrialization policies.
An economist believes that, as Ghana moves to negotiate with China for debt forgiveness, the debt stressed country needs proactively to industrialize the economy in order to withstand external economic shocks.
Ghana’s economy suffered the shocks of COVID-19 and the Russian-Ukranian war as well as the skyrocketed petroleum price on the world market coupled with over-borrowing and mismanagement of public funds. These had a toll on the local currency, which depreciated more than 50 percent last year to the major international trading currencies with inflation breaking all time records in more than two decades to peak around 54 percent. These have led the country to restructure its debt which has crossed 100 percent of Gross Domestic Product (GDP). However, the economist diffused perceptions that China may seize the opportunity to take over the local industries if the negotiations are successful.
“Do we as a local economy immediately have capacity to produce the things that we ordinarily import from China?”, An economist and currency analyst at GCB Capital Limited Courage Boti said. “Our industrialization policies are not up and running. So I don’t see what China will demand from us differently from what we have in place”, he added.
The Finance Minister, Ken Ofori-Atta, last week disclosed that, as part of government’s effort for external debt relief, its planned high-level meeting with Chinese creditors over Ghana’s debt restructuring which has been postponed to late March 2023.
Meanwhile, Economist Courage Boti argued that the perception of importation of inferior goods from China is subjected to the purchasing power of the importers.
“In a bargain, concessions must be made .I think at this point in time the most pressing issue is that our debt is not sustainable and we must find a way to return it to sustainable path. Negotiating with them will mean that we’re trying to get them on our side so that they could cooperate with debt restructuring,” he said.
“The question is, it will come at what cost? Will it mean dampening of Chinese goods?,” He quizzed.
Again the Chinese goods on our markets: the quality argument and associated perceptions, our traders decide what they bring in and so the quality we talk about are determined by what we are willing to buy,” he stated.
