Early intervention by government prevented more strain on BoG – Seth Terkper
Former Finance Minister and government adviser on finance, Seth Terkper, says the current administration inherited a severely distressed economy characterised by unpaid debt obligations, high inflation, and significant fiscal challenges.
Speaking on PM Express Business Edition on the financial losses recorded by the Bank of Ghana, Mr Terkper said the difficult economic conditions inherited by the government must be considered in assessing current policy decisions.
According to him, the country faced serious risks at the time the administration took office, including the possibility of falling out of the International Monetary Fund (IMF) programme.
“We inherited a situation where debt was suspended and not paid, and we risked being kicked out of the IMF programme with disastrous conditions,” he said.
He further stated that investor confidence in Ghana’s debt market had significantly weakened, with the country’s bonds downgraded to junk status.
“We inherited a situation where the ratings of our bonds were junk,” he added.
Mr Terkper also described the broader fiscal environment as highly unstable, citing elevated inflation and a large budget deficit.
“We inherited a situation where the fiscal was just in a mess, where inflation was high with a huge deficit,” he stated.
His comments followed observations during the programme that sections of the public previously believed the economy was relatively stable.
In response, the former Finance Minister defended the early interventions introduced by the Finance Ministry, arguing that urgent action was necessary to stabilise public finances and reduce pressure on the central bank.
“You seem to be downplaying what the Minister for Finance was doing,” he said.
According to him, one of the first measures implemented was to tighten control over government cash management to prevent excessive financing of government spending by the Bank of Ghana.
“The Minister for Finance moved in quickly to mop up loose government cash. That prevented the Bank of Ghana, or saved the Bank of Ghana, from continuing to finance government,” he explained.
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