Minority cautions gov’t on 'ballooning' national debt

The Minority in
Parliament has accused the government of increasing Ghana's debt burden and
using the money on consumption instead of capital expenditure or infrastructure
development.
Speaking at a press conference
in Accra, last week, the Minority Spokesperson on Finance, Mr Cassiel Ato
Forson, said the government met a debt of GHc120 billion and added GH¢80
billion bringing the total debt to GH¢200 billion.
"You can do all
the propaganda about the cosmetic fiscal deficit numbers, but republic debt
will show your smoothness level", he said.
Flanked by the Deputy
Minority Leader, Mr James Avedzi, and a member of the Finance Committee of
Parliament, Mr Fifi Kwetey, Mr Forson, who is the Ranking Member on the Finance
Committee, said the Minority Caucus in Parliament had noted the latest report
of the Monetary Policy Committee of the Bank of Ghana and taken notice of the
current national debt which stood at almost GH¢ 200 billion as of the end of
the first quarter of 2019.
"The GH¢ 200
billion national debt represents an increase of about GH¢ 80 billion in the
last two and half years alone by President Akufo-Addo and has raised the debt
to gross domestic product (GDP) ratio from 56 per cent in 2016 to almost 58 per
cent", he said.
Mr Forson said the New
Patriotic Party (NPP) in opposition had promised not to borrow and indicated
that the NPP in government had benefited from a 25
per cent bonus or increase in GDP due to the rebasing exercise.
Again, he said the
government inherited two additional oil fields (Sankofa and TEN) that had
almost tripled output and at an average 60 per cent price increase.
Mr Forson said at
current exchange rate levels, borrowing alone had given President Akufo-Addo a
staggering $16 billion over the period.
He said the figure did
not include the GH¢ 5.7 billion borrowed under the ESLA Bonds last year.
Mr Forson said as
reported by Bloomberg last week, Ghana current public debt was the highest in
four years and made Ghana one of the countries with the greatest debt distress
risks in the world.
Surprisingly, he said,
"this is a government that has benefited more in terms of oil revenues
received since 2017".
Mr Forson said the
Minority Caucus was deeply concerned about the reckless borrowing of the NPP
government and demanded accountability.
"This extent of
borrowing marks a betrayal of the trust reposed in the President after he and
his then Vice-Presidential candidate promised in opposition not to borrow
because according to them, we had all the resources needed to finance our
development.
"Not only has the
President’s insatiable appetite for borrowing exposed that promise as hollow,
it also shows that he and his team do not possess the competence they claimed
to have to generate domestic revenue to finance the national budget.
"It is even more
worrying that despite this unprecedented level of borrowing, President
Akufo-Addo does not have any significant capital investments to show unlike his
predecessor, President Mahama, who invested borrowed funds in major capital
investments across all sectors of the economy from education, health, housing,
roads, railways, energy, communications, aviation, transport among
others", he said.
Mr Forson said almost
all major projects that were currently ongoing were those for which funding was
secured under President Mahama or had begun under him.
He said President
Akufo-Addo's inability to show any tangible outcomes for the excessive
borrowing raises serious concerns about the prudence of his borrowing
decisions.
Mr Forson recalled
that in opposition then-candidate Nana Akufo-Addo and his Running Mate, Dr
Mahamudu Bawumia, claimed that the then NDC government was spending on
consumption and that they could not see what was being done with the funds.
"We note that in
addition to this heavy borrowing, President Akufo Addo had had more money at
his disposal than all other governments and should have done far more than is
being done currently.
Mr Forson said the
total oil revenue that had been received between 2017 and 2018 and was expected
to be received in 2019 currently stood at GH¢12,328,703.024.81.
"An analysis of
the budget statements presented since 2017, shows that tax revenue alone has
brought in about GH¢ 113.4 billion ($ 21.4 billion at current exchange rate) in
the last two and half years.
"In addition to
this, GH¢ 3,779,523,324.42 ($713.03 million) has been received in the form of
grants since 2017 - by a government that projects an end to foreign assistance,
obviously as a slogan. Put together, President Akufo-Addo has had over GH¢ 200
billion and yet is unable to point to anything of significance since coming to
power.
"Government’s
issuance calendar for the second quarter of this year shows that another GH¢
12.1 billion will be borrowed with a net amount of GH¢ 566 million being added
to the debt stock by end of June. Our estimation, based on this trend, is that the
public debt will rise to about GH¢ 250 billion in a year by this time. This is
an addition of about GHS 130 billion", he said.
Mr Forson said the
current spate of borrowing threatened to erode the fiscal space provided by the
rebasing of the economy started in 2016 and which was concluded in September
2018.
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