World Bank President admonishes Ghana’s President Akufo-Addo to stop borrowing

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The World Bank President, David Malpass, has asked Ghana to hold down its non-concessional borrowing because of its impact on future generations.

According to him, “holding down the non-concessional debt means higher interest rate debt because that burdens the further generations.”

Malpass was responding to a question asked by a Ghanaian journalist who participated in the virtual Media Roundtable for some journalist in Western and Central Africa.

He added that the government needs to be transparent with both the debt taken on the investment projects that that debt might fund.

The World Bank president also revealed that it is also working closely with World Bank and IMF “as we both look to have countries have sustainable debt burdens rather than unsustainable debt burdens.”

The President’s comment is coming when Ghana has been classified as a high risk of debt distress country by the World Bank.

The Bank of Ghana indicated that Ghana’s debt stock had reached GHC291 billion ($50,140,405,800) as of the end of December 2020. This represents 76.1% of Ghana’s Debt to GDP Ratio.

Meanwhile, President Akufo-Addo, at a recent meeting in Paris, called for debt cancellation for some African countries.

Responding to this call, the World Bank President mentioned some initiatives that the Bank believes could solve this challenge.

He said the Bank supports the G20’s Debt Service Suspension Initiative—or DSSI—which has provided fiscal space to countries to cope with the impact of the pandemic.

Sixteen countries from West and Central Africa have requested to participate in the DSSI as of April 2021.

He indicated that a “permanent solution is necessary to reduce the stock of debt in the poorest countries. The World Bank and IMF are closely coordinating to support the G20 in implementing the G20’s Common Framework for debt reduction.”