“Ghana has accumulated too much debt in the past six-and-a-half years; 70 per cent debt to GDP ratio is unsustainable so the rampant borrowing must stop. Things have to change drastically,” Minority Spokesperson on Finance, Dr. Anthony Akoto Osei, said as he presented his party’s opinion on the Mid-Year Budget Review at a press conference in Accra.
Dr. Akoto Osei said the country was getting steeped into borrowing adding “Any country that is steeped in borrowing has lost control over its financials, and a country that has lost control over its financials has lost control over its destiny”.
Ghana’s total debt stock, as at May, this year, was GH¢90 billion representing 67.53 per cent of GDP, the Finance Minister, Seth Terkper, announced in Parliament last week.
Parliament, before going on recess last Friday, approved a number of loans totalling over US$300 million. The House also approved a request by government to raise an amount of US$1.5 billion from the European bond market.
Mr. Terkper explained that proceeds from the Eurobond would be used to pay existing loans and finance programmes and projects proposed in the 2015 budget.
Dr. Akoto Osei however, believed that the government’s appetite for borrowing was crowding out the private sector from accessing funds from the domestic financial market.
“The effect of the crowding out of the private sector is the high interest rates that businesses have to pay for accessing credit,” he said and entreated the government to allow the private sector to get access to funds from the market at reduced interest rates to enable them to expand and create jobs.
He said notwithstanding the borrowing, the government owed SSNIT GH¢157 million, GETFund GH¢112 million, and District Assemblies Common Fund (DCAF) GH¢191 million and added that unpaid road arrears and non-road arrears amounted to GH¢100 million and GH¢202 million respectively.
According to Dr. Akoto Osei, the government rushed to the International Monetary Fund (IMF) because the economy was characterised by low GDP growth, high interest rates, fast depreciating currency, low aggregate demand, deepening energy crisis, high inflation, and large fiscal deficits among others and pointed out that all the indicators had not improved since the government adopted the IMF programme.
He asked the government to formulate and implement policies to support stronger economic growth and reduce the high unemployment.
He also stressed the need for a strong currency saying, “to have a strong currency, we must promote real investment in the economy, increase our export base and become producers of the goods we consume”.
On the energy crisis, he said the “talk shop” on fixing but not managing the crisis must end because businesses deserved reliable energy supply.
“The Bank of Ghana must be up and doing. A sound monetary policy is critical for maintaining a strong economy,” he said and urged the government to tackle corruption.
By Yaw Kyei