We’re making huge savings, says Amin Adam

Finance Minister Mohammed Amin Adam has said the government is realising substantial savings despite reduced expenditure due to the country’s renegotiation and restructuring of its debt.

Speaking on the Asaase Breakfast Show (ABS) on Friday (26 July), Adam explained that these savings stem from an agreement that the government will not service its debts, particularly for official creditors.

“In spite of the curtailment in expenditure, you will notice the curtailment is in respect of a reduction in interest payments and also amortisation because we’ve negotiated our debt,” he said.

“We’re making huge savings from the negotiation and part of the savings is attributed to the understanding that we will not service our debts, particularly for the official creditors.”

Adam further clarified that the country will not service its debts from now until 2026.

“We will not service our debts between now 2023 and 2026 and for the Eurobond holders, we also will not service our interest rates at the level that we did when we took the facilities from them, as well as the principal payments is also being reduced and that’s what we call debt service relief of about US$4.4 billion.”

He provided a specific example: “This year, we should have been paying the Eurobond holders about US$1.8 billion; we’ve negotiated to pay about US$477 million so that gives us some window in savings. It may not bring money to us physically but it gives us a window because what we would have been spending, we will no longer be spending that money.”

Adam concluded by noting that these savings have reduced the government’s interest costs and amortisation obligations. “This is primarily the reason expenditure appropriation is reduced by 2.1% but all other programmes of government have been maintained.”

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