He said new structural measures had been put in place by the government to ensure that the debt phenomenon did not haunt the economy and move it into a highly indebted poor country (HIPC).

The minister explained that the measures included opting for planned long-term debts of between five and 15 years to finance capital expenditure.

Mr Terkper said at the GRAPHIC BUSINESS Stanbic Bank Breakfast Meeting in Accra last Tuesday that staying at the short end of the debt market (borrowing through treasury bills) only reduced the economy into a cyclical phenomenon of borrowing new funds to retire accruing debts, but the government was committed to ending that streak with the new measures which had started yielding goods results.

“When we buy Treasury Bills (T-Bill), it means we are refinancing the deficit. When the yield is high, it is good for people, but it increases the cost of servicing the deficit. That is why the T-Bill and the bond rates must be reasonable for the government to refinance. Rolling it over means we are only borrowing new money to refinance the old short-term debt”, Mr Terkper said, bemoaning some of the impacts borrowing from the short end of the domestic market has on the economy.

The finance minister said with some inflows the government had together with setting up the Sinking Fund, it had been able to refinance and extended the country’s debt repayment to 2030 which would provide the economy with some fiscal space to finance capital projects less expensively.

“So what happened is that we have been able to get enough money to take off the 2007 bond which was also due this year. But thankfully and for the first time, we used our Sinking Fund to buy back our own bond,” Mr Terkper stated when he addressed a cross-section of economic actors in the country at the GRAPHIC BUSINESS Stanbic Bank Breakfast meeting held at the Labadi Beach Hotel, La.

He added; “These are some of the structural measures we are trying to put in place to ensure that the debt phenomenon does not haunt us and we do not move into HIPC again.”

Graphic Business, Stanbic collaboration

On the theme, “Election year budget deficits: Implications for macroeconomic stability”, the meeting was also addressed by the Director of the Institute of Statistical, Social and Economic Research (ISSER) of the University of Ghana, Professor Felix Asante, and chaired by Mr Kwaku Awotwe, the current Board Chairman of Stanbic Bank Ghana and a former Chief Executive Officer of the Volta River Authority (VRA).