According to him, debt treatment was only an aspect of the fiscal tool box needed to fix such an ailing economy and could, therefore, not be used to bring about economic recovery.

“The debt treatment is just one aspect in the fiscal tool box. You cannot use the debt exchange programme to bring about economic recovery if you do not link it up to a drastic drop in inflation, bank lending rates and the size of the government,” he said.

Excessive spending

In an interview with selected journalists at his office in Accra yesterday, Dr Duffuor added that the issue confronting the country was the excessive spending on interest payments which had been occasioned by a high level of government borrowing.

“We spend too much on servicing debt because of interest payments, so if we don’t take measures to make sure the interest cost does not rise again, then we will be back to square one and this debt treatment will yield no results,” he said.

Dr Duffuor, who is also a former Governor of the Bank of Ghana, said even though debt treatment would give the country the breathing space, urgent steps must be taken to ensure that the fundamentals of the economy picked up to support growth.

It includes sustainable debt levels, lower interest rates such as policy rate, lower inflation, nil or lower fiscal deficit and high volume of foreign reserves, among others.

He said the situation of the country had been worsened by the government, adding “as an economist, it is not like we are against the debt treatment because we saw it coming, but how the whole exercise is being carried out is not right”.

“It has indeed damaged the confidence of the investor community and that is going to impact on economic growth,” the former Governor said.

Borrowing

Dr Duffuor, who is also seeking to lead the opposition National Democratic Congress (NDC) as its flag bearer in the 2024 general election, said the country could have avoided the situation it found itself in if the government had not embarked on the kind of borrowing spree witnessed between 2017 and 2021 from both the international and domestic bond markets.

He said that had led to the prevailing rapid growth in expenditure and deteriorating domestic revenue mobilisation, culminating in huge debt service problems.

According to Dr Duffuor, it would take a new crop of leadership with a high level of consciousness to deal with the economic challenges since those involved in causing the difficulties could not be trusted to resolve them.

The NDC presidential hopeful further described as sad the fact that the present managers of the economy had not learnt from the effect of their borrowing spree which he said had landed the country in the quagmire.

“From the look of things it does not seem like the government appreciates the challenges we find ourselves, if not they wouldn’t be contemplating going back to the bond market to borrow as was stated by the Deputy Minister of Finance on the floor of Parliament that but for the downgrades by the rating agencies government would have raised $2 billion to support the economy,” he said.

Touting his credentials as a good manager of the economy, Dr Duffuor said despite not going to the bond market between 2009 and 2012, the government he served was able to mobilise domestic revenue to run the country.