Economists Dr. Said Boakye, Head of Research at the Institute of Fiscal Studies (IFS), and Professor Peter Quartey, Director of the Institute of Statistical, Social and Economic Research (ISEER), have assured that the departure of Finance Minister Ken Ofori-Atta will not disrupt ongoing external debt restructuring discussions and the country’s collaboration with the International Monetary Fund (IMF).
Despite concerns raised by various quarters, the economists assert that Ofori-Atta’s exit was anticipated and is unlikely to surprise the nation’s bilateral and commercial creditors.
Contrary to fears that a new minister might introduce policy shifts aligning with the ruling party’s new leadership, Boakye and Quartey maintain that the transition will not negatively impact negotiations.
Ofori-Atta, Ghana’s longest-serving Finance Minister, faced mounting pressure over the past year due to perceived failures in economic policy implementation, exacerbating living conditions and escalating national debt. Calls for his replacement came from both Majority and Minority members of Parliament, as well as the public.
Previously, President Nana Addo Dankwa Akufo-Addo urged patience from his party’s Majority members, emphasizing the importance of Ofori-Atta concluding negotiations with the IMF.
However, in a comprehensive Cabinet reshuffle on February 14, which saw the removal of 18 ministers, the President yielded to pressure, appointing Minister of State in Charge of Finance, Dr. Mohammed Amin Adam, as Ofori-Atta’s successor.
Dr. Amin Adam is now entrusted with the crucial responsibility of finalizing the nation’s external debt restructuring efforts, as Ghana endeavors to restructure approximately $20 billion in external debts, with $13 billion tied up in Eurobonds.
Following the departure of Mr. Ofori-Atta, financial research institute Morgan Stanley issued a report highlighting potential downside risks to the country’s debt restructuring negotiations.
The report noted that the minister’s exit had immediate effects, causing government bonds to plummet on the day of the announcement. It highlighted concerns regarding the optics of changing finance ministers during the final stages of external debt restructuring, which negatively impacted bond prices.
“We think a reaction stems from the uncertainty regarding how the new minister views the current negotiations concerning key discussion points such as the value recovery instrument (which is under consideration) and the restructuring timeline,” it noted.
A note maturing in 2026 fell 0.55 cents on the dollar to a three-week low of 46.5 cents, according to data from Tradeweb.
No cause for alarm
But in a sharp rebuttal to the development, Dr Said Boakye, in an interview with the Graphic Business, was convinced that there was no cause for alarm, explaining for instance that the domestic debt restructuring had been completed, with discussions with the external creditors also at an advanced stage and ,therefore, the latest development does not present any challenges going forward.
“The IMF is heavily involved in our external debt restructuring and it’s the whole government which is dealing with them so any finance minister who will come in will be briefed on the progress.
I don’t think it will have any impact. If it had been earlier when he had just started, perhaps it would have had some impact but even that will be very minimal,” he stated.
He said although it was the politicians who lead some of these discussions, the real work is normally done by the technocrats at the ministry who have all the records and history and could ,therefore, brief whoever is in charge on the progress.
Dr Boakye added that, “if the exit were a shock then we could say it will have some impact but the finance minister possibly exiting has been in the news for a long time.”
Usually, what investors and the financial sector respond to are shocks which are things they are not expecting but this one is not a shock,” he said.
No challenge ahead
Professor Peter Quartey, for his part, said he does not foresee any challenge with the external debt restructuring process because the finance minister does not go for the negotiations alone.
“He goes with a team of competent people from the Bank of Ghana, the Ministry of Finance and other key government officials so I don’t think his exit will affect things significantly.
There is only going to be a new face leading the team but it shouldn’t affect discussions so far. There is continuity in leadership in governance so that should not be a problem,” he stated.
He said the investors should ,therefore, feel comfortable because there have been lots of agitations from the public for the exit of Mr Ofori-Atta.
“It was the noise for his exit that would have rather unsettled the investors but if the minister has now exited and the team is still intact, there is no cause for alarm. Besides, the new face is not new to the ministry to create any challenge for the investor community.
“Perhaps, it might even bring some renewed confidence because they would want to see what fresh ideas are coming on board,” he added.
Assurance
The Minister of Finance, Dr Amin-Adam in a post after his announcement said it was important to note that the country was under an IMF programme, giving an assurance to the IMF and business community that he would ensure that the programme would remain on track.
“I will work to ensure that the programme does not suffer,” he stated.
The IMF Managing Director, Kristalina Georgieva, in a letter dated February 15 congratulated Dr Amin-Adam on his appointment as Minister of Finance.
“Your leadership will be essential in sustaining Ghana’s reform effort and in further extending the current momentum of compelling programme performance and gradual economic stabilisation.
“I would like to assure you of the IMF’s continued commitment to support you in these endeavours,” she stated.
