The Minister of Finance, Mr. Seth Terkper says government is concerned about the country’s debt portfolio and will not do anything untoward to throw the Ghanaian economy out of gear.
Mr. Terkper said reports that the country’s debt stood at 70 per cent of its total Gross Domestic Product (GDP) were untrue and misleading. He revealed that the debt stock stood at 62 per cent of GDP and that the figure was on the account of the strength of the cedi as against major trading currencies in July.
However, the Governor of the Bank of Ghana, Dr. Henry Kofi Wampah, at a news conference in Accra, indicated that the country’s debt stock as at the end of August stood at more than 70 per cent of GDP.
Addressing investors at the 2015 West Africa Investors’ Conference in Accra yesterday, the Finance Minister said, “it is not true that we’ve been adding to the debt” in the last year ending July 31, contrary to claims that the government was adding up to Ghana’s debt astronomically and could soon be heading for a Highly Indebted Poor Country (HIPC) status.
The conference, organised by Stanbic Bank, on the theme,“From Promise to Progress,” was attended by both local and foreign investors in order to explore investment opportunities in the country.
It served as a platform where investors and locally listed companies engaged in deliberations to create an environment where the two groups could have a better idea about themselves, and a fair idea of the fundamentals of the economy from people in authority.
“If you look at the debt in dollar terms by the end of 2014, it stood at US $24.6 billion but at the end of July, it was US $24.4 billion but in between (this period), it went down to US $23 billion, so it is not true that we have been adding to the debt,” Mr. Terkper stated.
The opposition New Patriotic Party (NPP) and other financial analysts have argued that the government’s spate of borrowing was worrying and could grind the economy to a halt.
But Mr. Terkper said, Ghana was on the right track and progressing steadily to overcome the economic challenges that had engulfed it over the last few years, stressing that the monies were being invested in the appropriate sectors of the economy with the potential to repay the monies back over a period.
He said every loan facility secured, had its own repayment policy, adding that the amended Petroleum Revenue Management Bill had a clause which provides for a portion of the revenues to be used to service loans.
Mr. Terkper explained that the financial conundrum in which the country found itself was as a result of overruns in 2012 and external shocks which were not election related as it had been attributed to over the years.
He said the years of correction -2013, 2014- had all been challenging, hinting that the full benefits of the sacrifices made after 2012 were evident in the gradual recuperation.
Some of the positive signs to show the economy was recovering, he said, included the introduction of the Ghana Integrated Financial Management Information System (GIFMIS), which according to him, has helped reduce the wage bill to 53 per cent from 70 per cent as a result of the deletion of thousands of ghost names on government payroll.
He said going forward, there was the need to maintain fiscal discipline and remain within the provisions of the budget, a thing he said government was committed to.
Mr. Stephen Bailey-Smith, the Head of African Research and Global Markets at Stanbic Bank, said the International Monetary Fund (IMF) programme which government had signed on to, would, with time, heal the country’s economy from its current status.
He said the programme could only be successful if the stakeholders ensured a stable currency and tapped government on the back for the “financial discipline” it had exhibited this year.
He said as a developing country, governments must do all within their powers to avoid budget over runs, especially because of elections to sustain the economic gains of the country.
By Julius Yao Petetsi