Wednesday, 31 July 2019

Ghana: a hugely mortgaged country, with very little to show


Image result for Ken Ofori-Atta and alex mould

Alex Mould writes

The true Government of Ghana (GoG) debt is hidden in the bankrupt State Owned Enterprises (SOEs) such as; Tema Oil Refinery (TOR), Electricity Company of Ghana and almost bankrupt SOEs (GRIDCO, VRA, BOST and a few others). We are also gradually making the likes of Ghana Gas and GNPC not credit worthy.

Government needs to come out clean with the true debt exposure, and I challenge the likes of the World Bank and IMF, who seem to scrutinise the books more when NDC is in government, to do proper analysis of government’s debt. More important on the free cash flow that government has to meet its ballooning debt service which has been stretched out from an average-life of 2.0years to nearly 5 years currently.

What this means is that unless government increases in revenue and or reduce its costs, there will be very little fresh cashflow room to create new borrowing to meet important recurring maintenance expenditure (currently neglected, hence our bad roads and other failing infrastructure) and new infrastructural investment in key sectors  like roads, hospitals/clinics, schools, energy, community policing, etc

It looks like, other than getting aids & grants, the next step will be to sell important assets or increase taxes.

What they need to do like any prudent management is to reduce costs especially the discretionary spend, curtail foolish grandiose party-manifesto promises that don’t make economic sense especially the way they are not thought through properly, increase efficiencies in public service and especially in SOEs, and support growth and jobs;

Simple do what the citizens who put you in government expect you to do: Solve the challenges, Do not create new ones

Simply let the taxpayers know you are doing the simple things like cleaning our cities; providing good education; solving the energy challenges - not simply by adding levies to increase utility tariffs all in the name of ring-fenced Legacy Debt (when these very sectors SOEs are still bleeding currently till we don’t know when).

Let’s feel and see the results ourselves - if things have been streamlined at the ports you don’t have to tell us, the manufacturers and importers should feel it.

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