Ghana is not eligible for HIPC but a High risk of Debt Distress country – IMF

807059781_2905The International Monetary Fund (IMF) says Ghana is not eligible for Highly Indebted Poor Country (HIPC) but it is however classifying Ghana as a High risk of debt distress country.

In a response to an email sent by Joy Business seeking interpretation on Ghana’s position as one of the countries that have qualified for, eligible, or may wish seek HIPC assistance, the IMF clarified that  Ghana has already, received, debt relief  under the HIPC initiative and it is at post-completion point.

This means the country has now completed the initiative therefore Ghana cannot classify as eligible.

The fund indicated that Ghana has been put on the High Debt Distress Radar based on a debt sustainability carried out by the staff of the IMF and the World Bank Ghana.

“In these circumstances, reducing the debt burden and associated vulnerabilities is a priority”.

The Fund added that the government’s plan of ambitious front loaded fiscal consolidation plans are on track, which is aimed at bringing the public debt gradually down to a more sustainable level.

However IMF is worried that Ghana “is still facing high gross financing needs, due to  tighter conditions  on the domestic securities market, the government’s financing mix for the remainder of 2015 is projected to be more externally oriented”.

The fund noted that the IMF board has approved an increase in the debt limit for non-concessional external borrowing for Ghana to allow for a new Eurobond, as well as to finance critical development projects.

In addition, the authorities adopted a debt management strategy which aims at ensuring that the government financing needs and payment obligations are met at the lowest possible cost, with prudent risk management.