DDEP will close financing gap; facilitates 55% debt-to-GDP sustainability target

The successful implementation of the Domestic Debt Exchange Programme (DDEP) will close the country’s financing gap and enable the government to meet the debt sustainability target of 55percent of debt-to-GDP in present value terms by 2028, Finance Minister, Ken Ofori-Atta, said.

According to him, the government’s debt exchange programme, which secured over 80percent participation by the time of closure, was part of a broader response strategy for addressing the country’s current economic challenges.

“While we continue to secure an IMF programme to boost confidence in the economy, we are complementing this by enhancing our domestic mobilisation efforts,” Mr. Ofori-Atta said Thursday when he briefed Parliament on the DDEP.

Seeking financing from BoG

Ghana lost access to the International Capital Markets (ICM) at the beginning of 2022. At the same time, the country’s budget implementation was confronted with domestic financing challenges from the auctions as well as lower than estimated domestic revenue mobilization.

“These presented a very challenging macroeconomic environment during 2022, leading to a widened financing gap of the Budget and therefore became necessary for the Bank of Ghana to fund shortfalls at the auction market to avoid a disorderly default and prevent a deeper crisis,” the minister said.

Under these circumstances, Mr. Ofori-Atta told Parliament taht it was necessary for the government to seek financing from the Bank of Ghana to augment its fiscal operations for the year.

The Bank of Ghana, last week, concluded work on its financial accounts for 2022 and reports that the total overdraft extended to Government for 2022 was GH¢37,956.82 million.

“Mr Speaker, in line with Section 30 (6) of the Bank of Ghana Act, 2002, (Act 612), we are using this platform to inform the legislature of the financing of the budget by the Bank of Ghana. The Domestic Debt Exchange exercise and the External Debt Restructuring Programme, will make such financing unnecessary, going forward in 2023 and beyond,” he stated.

He added: “Mr. Speaker, all these efforts would be greatly enhanced if the Income Tax (Amendment) Bill, Excise Duty & Excise Tax Stamp (Amendment) Bills as well as the Growth and Sustainability Levy Bill, which are outstanding in this august House could be prioritized and passed.”