The Multilateral Debt Relief Initiative (Mdri): Ghana’s Experience (2004-2010)

by J Amanor

Institution: University of Ghana
Year: 2015
Posted: 02/05/2017
Record ID: 2075705
Full text PDF: http://ugspace.ug.edu.gh/handle/123456789/7296


After reaching the completion point under the enhanced Highly Indebted Poor Countries (EHIPC) initiative, Ghana became eligible for the Multilateral Debt Relief Initiative (MDRI) in July 2004. Ghana’s experience with the MDRI has therefore become yet another lesson for future debt relief initiatives. The study was aimed at identifying the contributions of the MDRI to debt sustainability, poverty reduction, achievement of Millennium Development Goals (MDGs), economic development, and official development assistance (ODA) to Ghana. The study was based on the assumption that the Third World countries’ excessive debt was caused by the hard economic times strengthened by structural and social problems as well as foreign direct investment (FDI), payment of interest as a result of the debts, exportation of raw materials for relatively expensive finished products, and disproportionate trade agreements which created unhealthy distribution of wealth from the periphery to the core as dependency theorists argued. The study established that due to debt relief, Ghana’s debt burden has become sustainable, poverty has reduced marginally, progress has been made in the achievement of MDGs and there has been marginal growth in the economy, despite the reduction in official development assistance to Ghana. The study recommended that for Ghana’s debt to remain sustainable, the Government of Ghana should adopt policies that ensure external debt financing of the national budget is proportional to the current and sustainable growth rate of the Gross Domestic Product (GDP), decentralise the usage of debt relief funds directly to Metropolitan, Municipal and District Assemblies (MMDAs) or alternatively, to projects and programmes aimed at reducing poverty. The International Financial Institutions (IFIs) should design initiatives specifically to relieve Ghana and other HIPCs of excessive domestic debt burden and ensure the continuance of ODA as additional resources for debt management. Advisors/Committee Members: Antwi - Danso, V (advisor).