Gov’t’s quick action prevented more pressure on BoG when NDC took over – Terkper

Former Finance Minister and current government adviser on finance, Seth Terkper, has stated that Ghana’s current administration inherited an economy facing severe financial distress, marked by unpaid debt obligations, soaring inflation, weakened investor confidence, and mounting fiscal challenges.

Speaking during the PM Express Business Edition programme, Mr. Terkper addressed concerns surrounding the financial losses recorded by the Bank of Ghana, insisting that the broader economic conditions inherited by the government should not be overlooked.

According to him, the country was already under significant economic pressure before the current administration assumed office. He explained that debt repayments had been suspended, creating uncertainty around Ghana’s financial credibility and increasing the risk of disruptions to the country’s programme with the International Monetary Fund (IMF).

“We inherited a situation where debt was suspended and not paid, and we risk being kicked out of the IMF programme with disastrous conditions,” he said during the interview.

Mr. Terkper further noted that investor confidence in Ghana’s debt market had sharply declined at the time. He pointed out that Ghana’s bonds had been downgraded to junk status, making it difficult for the country to attract affordable financing from international markets.

“We inherited a situation where the ratings of our bonds were junk,” he stated.

He also described the country’s fiscal condition as highly unstable, citing high inflation, widening budget deficits, and pressure on public finances as major concerns facing the government at the time.

“We inherited a situation where the fiscal was just in a mess, where inflation was high with a huge deficit,” he explained.

His comments followed observations by the programme host that many Ghanaians believed the economy was relatively stable before the change in administration. However, Mr. Terkper defended the actions taken by the Finance Ministry in the early stages of the government’s tenure, arguing that swift interventions were necessary to restore fiscal discipline and stabilise the economy.

“You seem to be downplaying what the Minister for Finance was doing,” he remarked.

He revealed that one of the government’s immediate measures was to strengthen control over public sector funds and improve cash management systems.

“The Minister for Finance moved in quickly to mop up loose government cash,” he said.

According to Mr. Terkper, that intervention played a crucial role in reducing pressure on the central bank and limiting further financing of government expenditure by the Bank of Ghana.

“That prevented the Bank of Ghana, or saved the Bank of Ghana from continuing to finance government,” he added.