<<Print>>

Simon Osei-Mensah, Member of Parliament for the Bosomtwi Constituency in the Ashanti Region has accused the ruling Government of reckless borrowing indicating that the current debt stock of Ghana has been ballooned by over 200% over the last six years under the stewardship of the National Democratic Congress (NDC).

According to Mr. Osei-Mensah who doubles as a member of the ECOWAS Parliament, the over 200% increase in the national debt stock also represents about 70% of money borrowed by all governments of Ghana combined.

In an exclusive interview with The Crusading GUIDE on the Mid Year Review of the Budget Statement and Economic Policy and Supplementary Estimates, the MP explained that in 2009, the NDC government took over a total debt portfolio of US$8.1 billion from the President Kuffuor-led NPP government. This amount represented the accumulated loan balances of all previous governments. As at end-December 2014 the total debt had reached US$24.8 billion representing an increase of US$18.7 or 206% above that of 2008.

“Such desire or appetite for borrowing is quite worrisome especially as it is not commensurate with the level of development projects in the country. Actually, sight must not be lost of the fact such high level of borrowings amidst lack of financial discipline and massive corruption has the potency of pushing the country into financial collapse”, he stated.

He explained further that “currently, in cedi terms, the total debt of the country which is projected at GHc90 billion, representing 67% of GDP is a serious threat to debt sustainability of the country. This amount is almost ten times the total debt of GHc9.5 billion as at end-December 2008”.

Expressing some worry on high interest payments, the Legislator observed that, “interest payment alone is over GHc9.0 billion almost the same as the total debt position of the country in 2008. It is worthy to note that there is no more HIPC Initiative so any debt crisis in the country may lead to imposition of very biting austerity measures on innocent and good people of Ghana as a consequence of economic mismanagement by the NDC government”.

“The country needs a major comprehensive loans audit to ensure that all loans accessed have been used efficiently for the intended purposes because the loans position is not commensurate with projects undertaken” he suggested.

On Thursday, July 23, 2015, the Minister for Finance in providing justification for the need for Parliament's approval of a US$1.5 billion Eurobond request proudly indicated that 32% of the country's current debt is from past governments, when some Members of Parliament expressed serious concerns over the rate of borrowing. It came as a shock since it gives a strong impression that he is enthused with the fact that the NDC government alone has borrowed about 68% of the current debt of the country within six years.

Sounding very worried, the made a passionate appeal to President Mahama “not to push us into the Greek situation since the current economic hardships are even unbearable and Ghanaians cannot afford to take more of their bitter economic mismanagement pills”.

According to Simon Osei-Mensah, the revised economic targets by the government “do not give any hope but rather paint a gloomy picture as they show poor anticipated performance in comparison to the initial targets set in the 2015 budget estimates. Additionally, it portrays the government's capacity inadequacies in stabilizing, sustaining and growing the economy”.

The Government's macroeconomic programme as indicated in the budget aims to attain and sustain macroeconomic stability and strong economic growth. However, according to him, “the reviewed performance of the first quarter and revised macroeconomic targets do not synchronize with the aim of the Government's macroeconomic programme of attaining and sustaining stability and economic growth”.

The Minister reported that during the first half of the year, the country recorded some sterling performances which give hope for the short-to-medium term prospects of the nation. Notwithstanding this supposed achievements, the MP insists that the revised targets rather point to the reverse direction, an indication that the government lacks the capacity to sustain the positive performance to enhance economic growth.
The revised targets as indicated in the review report are; overall real GDP (including oil) 3.9 to 3.5, non-oil real GDP 2.7 to 2.3, end year inflation target 11.5 to 13.8 and overall budget deficit 6.5 to 7.3
None of the revised targets give any hope of a brighter future. “Before the NPP administration led by Former President Kufuor took over in January, 2001 when there was no oil find, the growth rate was 3.5. After 15 years and with oil proceeds inclusive, the government is projecting 3.5% and non-oil growth rate of 2.3%. What did we do wrong as a nation to merit these hardships under a regime of indiscriminate huge borrowings”, he asked?

The deteriorating exchange rate has seen some appreciation recently. However, the injection of foreign currency into the economy is not sustainable in the medium term period. Most of the expected inflows to support the stabilization of the cedi are from external sources for which the government has no control over. Therefore, the sustainability of the stabilization of the cedi is in doubt, according to some finance experts.

Touching briefly on the unending energy crisis, the MP opined that “instead of fixing the energy crisis to give some financial breathing space to businesses and individuals we are being showered with endless promises. Over three and half years of the energy crisis the government still tells us of short-term measures to solving the energy crisis. Ghanaians deserve better and they need power now”

“The simple message from the review and revised targets is that Ghanaians must further tighten their belts for more hardships, increasing unemployment and further price increases. The solution to these economic hardships is a change in government in the 2016 elections”, he stated