Government of Ghana steps up efforts to reduce debt of state firms

The government of Ghana has stepped up its program to lessen the debt burden of State Owned Enterprises (SOEs) on the national budget, Minister for Finance Seth Terkper said here on Wednesday.

“We are working towards sound balance sheets for the SOEs. It is the goal of government to strengthen the balance sheets of these SOEs, and to work with you on a transformation program which we have started already,” he told the CEOs of the SOEs at a forum.

SOE borrowing, the minister noted, is very heavy on consolidated fund and so Ghana is learning from what other countries did, as to how they successfully managed similar situations through the use of the countries’ resources.

He later explained to the media that although the risk of non-payment in every economy exists, there is the need to minimize the risk of non-payment through different mechanisms.

“Remember the Infrastructure Fund for example is a Sovereign Wealth Fund and if you look at the BRICS and other countries that have succeeded, particularly the Emirates. The strength lies in their Sovereign Wealth Funds-channeling their oil revenue into what we call Sovereign Wealth Funds,” the minister argued.

Ghana’s Debt-to-GDP ratio hovers around 66 percent, and the government argues that part of that debt burden comes from the borrowing by SOEs which is added to the government’s sovereign debt, some of which are to local banks, thus increasing the Non-Performing Loans (NPL) ratios of the banking sector.

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