Ghana government explains reasons behind current debt stock
The Government on Friday discounted claims by the Minority in Parliament that it had borrowed GH¢80 billion within a period of two and half years.
It said those assertions were borne out of mischief and lacked of understanding of how the national account was done.
Mr Kojo Oppong Nkrumah, the Minister of Information, who addressed a news conference in Accra, to react to the Minority’s allegations, said the current debt stock of GH¢198 billion was a public nominal figure.
He added that all the loans secured by the Government were approved by Parliament and did not amount to GH¢80 billion as being alleged.
The loans were approved by Parliament in accordance with Article 181 sections 55, 56, and 57 of the Public Financial Management Act, Act 921, of which the Minority were party to, he said.
He said the domestic financial market could not even raise GH¢80 billion within a period of two years for the government considering the volatility of the financial sector.
Explaining reasons that accounted for the increase in the debt stock from GH¢122 billion in 2016 to the current figure of GH¢198 billion, Mr Oppong Nkrumah said it was due to the disbursement of old loans by the government for various projects.
Additionally, the changes in the exchange rate, bailout of the financial services sector with GH¢12 billion and the IMF conditionality that required government to send funds to the Bank of Ghana for balance of payment support of which five billion was used for that purpose.
He said for instance, if a year ago, a dollar was equivalent to GH¢4 and someone owes $1 billion in cedi terms it would be GH¢4 billion and if a year down the line a dollar is exchanged for GH¢5 the person’s debt will increase to GH¢5 billion due to the shore up of the dollar rate.
The Minister also denied the Minority claims that the debt to the GDP ratio had increased from 56 per cent to 58 per cent, noting that it was currently pegged at 56.8 per cent just like what the previous administration left in 2016.
More so, the new paradigm shift in public spending, which placed a cap or threshold on borrowing did not allow government to borrow up to GH¢80 billion within two and half years.
The Minority in Parliament at a news conference on Thursday claimed that the Akufo-Addo’s Government had increased Ghana’s debt stock by GH¢80 billion and used the money on consumption, instead of capital expenditure or infrastructural development.
The Minority Ranking Member on Finance, Mr Cassiel Ato Forson, who spoke on behalf of the Minority, said the ruling government met a debt of GH¢120 billion and added GH¢80 billion, thus bringing the total debt burden to GH¢200 billion at the end of the first quarter of 2019.
The Minority’s criticism stemmed from the latest report of the Monetary Policy Committee of the Bank of Ghana.