THE NEGATIVE IMPACTS OF DOMESTIC AND EXTERNAL DEBT EXCHANGE ON INTEREST PAYMENTS IN GHANA

Abstract

This paper examines the complex dynamics of domestic and external debt swap, which has negative impacts on interest payments in relation to Ghana’s economic context. With the challenges that face a nation in managing its debt portfolio, it is important to understand what happens when there is an exchange of debts.

The study integrates qualitative analysis to measure the effects debt exchange on interest payments. The research assesses the efficacy of debt exchange programs to reduce interest rates on Ghanaian economy via analysis of historical data and case studies.

Major findings reveal the intricate interplay between debt exchange, interest rate and fiscal sustainability. The research reveals situations where domestic and international debt swap mechanisms have accidentally aggravated interest payment problems, which resulted in additional pressure on the government budget. In addition to the exchange rate fluctuations, global economic conditions and nature of debt instruments are discussed in detail as they help better understand observed trends.

Additionally, the paper explores how institutional frameworks and policy choices influence debt exchange outcomes. Analyzing the policy landscape of debt management, this study provides recommendations for improving the effectiveness of debt exchange strategies in Ghana.

This research has implications that go beyond the realm of academia as it provides important insights to policymakers and financial practitioners responsible for developing debt management policies. In the course of Ghana’s debt sustainability journey, this study does provide some valuable insights on how to improve practices around debt exchange in order to relieve interest payment burden and ensure economic longevity