Government has given the assurance that the impact of the new loans it is contracting will be minor since they are all concessionary loans.
The country’s debt to GDP ratio is almost 70 percent but government is allying fears of the public that the nation will not go HIPC.
“It can’t be true,” said a Deputy Minister for Finance, Cassiel Ato Forson, adding that “looking at the rate of adjustment that the country is going through, our debt is under control, we are actually going through a series of adjustments from where we were.”
“In fact, the primary deficit moved from 8.7% in 2012 to 4% in 2014. We have projected to move from the primary deficit to surpluses by end of 2016. This will bring the country’s debt situation to a sustainable level…whether you believe it or you don’t believe it, look at what we have been able to achieve?…what is happening now is that we are bring down the debt to sustainable limit,” he explained.
On Thursday, the Finance Ministry laid before Parliament about six loan agreements for approval by the House.
Currently, Ghana’s debt stock is about 70% to GDP and industry players have raised serious concerns about government’s appetite for borrowing despite its inability to pay its debts.
The Deputy Finance Minister however told Citi News’ Richard Sky that all the loan agreements “are highly concessional,” adding that “these are standard loans…these are not commercial loans; these are concessional loans for the purpose of budget financing.”
He admitted that indeed, government is contracting loans, but he was quick to explain that “the 2015 budget threw out the deficit and this deficit should be financed” but government, he said resorted to talking to multi-donor budget support groups who agreed to finance the budget through the agreements that were laid before the House on Thursday.
Mr. Forson revealed that government has projected that it will receive $500 million from development partners but he stressed that “the impact will of these debts will be negligible because of the concessionalities.”
He served notice to critics of the government and other doom sayers that the debt level will be effectively managed.
“Most of the time, you will have people out there who will doubt the government but I can assure that in the last few years, every single thing that we have done, there were people out there who had come out to say that it could never be done but we have proven to the world that we can do it and we have done it. Those projections that we’ve made for 2016 will be achieved.”
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