Ghana’s debt stock risen to GH¢122bn within eight years – President
President Nana Addo Dankwa Akufo-Addo, on Tuesday, said there is no fiscal space left for borrowing to meet the development aspirations of Ghanaians because of the unprecedented high debt stock of the nation.
Any attempt to borrow to meet national development needs, the President said, was, indeed, unsustainable.
Delivering his maiden State of the Nation Address to Parliament, he announced that Ghana’s total debt stock had risen from GH¢9.5 billion in 2009 to GH¢122 billion by the end of 2016, representing 74 per cent of the Gross Domestic Product (GDP).
He explained that more debts was accumulated by the previous NDC-led Government in the last eight years, than all other governments put together since independence, explaining that 92 per cent of the country’s total debt stock was incurred during that period.
He said the interest cost on these debts had also increased to GH¢14.1 billion in 2017.
President Akufo-Addo noted that the state of the country’s public finances was quite stark due to policy choices by the previous government, adding that, the country’s revenues were consumed by wages and salaries, interest payments on amortisation and statutory payments thus, accounting for 99.6 per cent of government revenues.
He said the country’s economic growth had declined dramatically to just 3.6 per cent GDP growth in 2016, in spite of the record financial resources available to the Mahama-led Administration.
The figure is the lowest in about 23 years recorded in the country’s history, he said.
President Akufo-Addo said the country’s banking sector had become fragile due to non-payment of loans, adding that, economic and financial data from the Central Bank showed that non-performing loans had risen sharply from 11.2 per cent in May 2015 to 17.3 per cent in December 2016.
He said the recent asset quality review of banks in the country showed significant vulnerability of banks to current economic condition thus, exhibiting significant weakness.
He noted that high rising public debt, high fiscal deficit, low economic growth, high rate of unemployment, high electricity tariffs and high non-performing loans, among others, were symptoms of the deeper structural problems that would require range of reforms to reverse the trend and ensure sustainable economic growth.
President Akufo-Addo noted that the previous government failed to honour its pledge not to embark on reckless spending in the 2016 Election Year, saying the Mahama-led government missed virtually all the targets under the IMF programme with fiscal indiscipline.
He said the total projected fiscal expenditure for the 2016 was GH¢43.9 billion representing 26 per cent of the GDP; but it rather exceeded the target spending GH¢50.3 billion representing 30.2 per cent of the GDP.
He said the previous government failed to tell Ghanaians the actual truth about public expenditures, explaining that there was a seven-billion Ghana cedi arrears and outstanding payments, which were being audited.
The country’s revenue performance for 2016 was poor because though the Government targeted GH¢37.9 billion representing 22 per cent of the GDP, the actual revenues mobilised was GH¢33.2 billion, representing 19.9 per cent of the GDP, he said.
President Akufo-Addo, however, assured Ghanaians that he would not allow the economy to collapse under his watch but said he would put in place prudent economic policies to reverse the trend and bring economic prosperity to Ghanaians.
The State of the Nation Address was in fulfillment of Article 67 of the 1992 Constitution, which stipulates that the President must give the State of the Nation at the beginning of each session of Parliament and before the dissolution of Parliament.