https://www.myjoyonline.com/use-mid-year-budget-review-to-cut-expenditure-to-complement-ddep-prof-mensah/-------https://www.myjoyonline.com/use-mid-year-budget-review-to-cut-expenditure-to-complement-ddep-prof-mensah/

Economist, Prof. Lord Mensah has urged government to use the Mid-Year Review of Estimates (Budget Review) in July this year to announce major expenditure cuts.

According to him, expenditure cuts in the budget will send a positive signal to investors and help put Ghana’s economy on a recovery path.

Prof. Mensah spoke on PM Express Business Edition with host, George Wiafe on February 2, 2023.

“If the Domestic Debt Exchange Programme (DDEP) is implemented well it may rather aid in the quick recovery of the economy. But this must be accompanied with the necessary expenditure cuts”, he stressed.

https://www.youtube.com/watch?v=SjELibZg8tU

Professor Mensah who is also a Finance Lecturer at the University of Ghana Business School said government needs to find a way to bring all parties affected by the DDEP on board.

Prof Mensah disputed suggestions that it will take Ghana about five to 10 years for an economic turnaround under a DDEP.

IMF hopeful of Ghana’s return

The Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva at a recent media interaction in Kigali the capital of Rwanda, disclosed that Ghana could return to the International Capital Market, when it closes a deal with both the domestic and international creditors.

Responding to the Ms. Georgieva’s assertion, Professor Mensah stated that the projection is not out of place, but should be backed with the needed fiscal discipline by government in the coming months.

Should Bondholders sign revised DDEP?

The Individual Bondholders Forum has always opposed the DDEP describing it as inimical to their interest.

However, Prof. Lord Mensah argued that despite the current concerns with the DDEP, it will be beneficial to accept the revised conditions.

 “I believe that bondholders should go ahead and sign up to the revised offer that has been presented by the Finance Ministry”, he said.

“I see this as an improved offer, compared to what was presented earlier by the Finance Minister”, Prof. Mensah added.

He, however expressed concerns about how the programme was implemented by the government.

“In such developments, information management is very important. We could have prevented this, if there was the needed stakeholder engagement and broader consultation on this programme”.

Banking Sector challenges

Touching on the impact on the banking sector, Prof Mensah was worried the programme could have negative effect on banks.

Some analysts have warn that the DDEP could impact on books, liquidity, capital requirement  and the  ability of the banks to  employ and manage their  current staff strength.

But Professor Mensah is of the opinion that banks may be forced to review their investment decisions.

“I believe that this program will help review the interest rate structure in the country going forward” .

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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.