The World Bank Group President, David Malpass, has expressed displeasure over Ghana and Nigeria’s refusal to join the Debt Service Suspension Initiative (DSSI).
The DSSI, which had been in place since May 2020, ended at the end of December 2021.
The DSSI, created by the International Monetary Fund (IMF) and World Bank, gave nations the option to halt debt service while focusing on using their minimum available finances to meet other obligations.
At a seminar in Washington, DC, Mr. Malpass was asked about claims that the Bretton Woods institutions aren’t doing enough to aid in the debt cancellation of some African nations that are in financial distress.
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But in response to the question, he noted that Ghana and Nigeria had not submitted applications for the DSSI, which would have given them some financial breathing room for loan repayment.
“Kristalina (IMF Boss) and I were talking yesterday with the Group about the Common Framework. If countries could have a situation where the common framework clause allow the country to have a standstill on debt, that would help the country choose their path forward on debts restructuring. That would mean they would get a break on debt repayment while they work on debt restructuring,” he clarified
Mr. Malpass stated that such initiatives are designed to help reduce the impact of economic hardship on developing countries.
He, however pointed out that some developing countries refused to take advantage of the initiative to minimise the impact of the current global hardship on their citizens.
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“Nigeria and Ghana both, did not ask for the common framework treatment”, he said, adding that the situation has made it difficult for such countries to overcome the negative impact of current global economic hardship on trade and currencies of developing countries.
Debt to GDP to hit 90.7% – IMF
The International Monetary Fund (IMF) has previously predicted that Ghana will have a debt-to-GDP ratio of 90.7% by 2022.
This was noted in the Fiscal Outlook Report that was published in conjunction with the ongoing IMF/World Bank Annual Meetings in Washington, D.C., USA.
The research also predicts that by 2023, the debt-to-GDP ratio may drop to 87.8%.
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The IMF predicts that by the end of 2022, revenue as a percentage of GDP might reach 14.1%.
According to the research, which designated Ghana as a Low Income Developing Country, it will thereafter rise to 14.7% in 2023 and 15.4% in 2024.
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Ghana should have signed up for DSSI – World Bank Group President.
