Ghana's Debt Has Soared By 700% In 6years

Within the last six years alone, Government’s excessive borrowing has seen its debt increased by 116% every year, Dr. Mahamudu Bawumia, the New Patriotic Party (NPP)'s running mate for the 2016 elections has analysed.

According to the economist, having come out of the highly indebted poor country (HIPC) programme, the debt relief resulted in a reduction of the country’s debt burden to GH¢9.5 billion by the end of 2008, however, the debt “dramatically” increased to GH¢76.1 billion within six years.

Speaking at 4th Distinguished Speaker Series organised by the Central University College Tuesday, Dr. Bawumia observed that Ghana increased its debt by 700% within a six-year period translating into 116% increase in the country’s public debt every year. The lecture was dubbed “The IMF Bailout: Will the Anchor Hold?"

“This frightening rate” of borrowing by Government “is mindboggling and”, the former Deputy Governor of the Bank of Ghana assessed, condemning what he described as the “degree of recklessness in management of Ghana’s debt”.

He also revealed that in 2008 Ghana was paying 679 million cedis as interest on its debt, increasing significantly to 9.57  billion cedis in 2015 alone, about 14 folds of interest paid in six years ago.

Churning out one startling figure after another, Dr. Bawumia who is also a visiting lecturer at the Central University noted that Ghana’s interest rate to GDP increased from 2.8% in 2008 to 7.1% in 2015.

In his assessment, the country’s “ballooning and unsustainable debt” has compelled the government to borrow more to service maturing debts.

Already, Ghana’s debt is four times more than the country’s projected oil revenue, according to Dr. Bawumia, pointing out that “our oil revenue has been compromised”.

Interestingly, over the total eight years under the NPP, the country raked in 15 billion cedis in taxes as against 62 billion by the National Democratic Congress within six years, he said.

Nonetheless, Ghana under the current government found it necessary to go for an IMF bailout to the tune of about 1 billion dollars, because Government has not been fiscally disciplined, he remarked.

Dr. Bawumia stated that the country recorded fiscal deficits of 9.5%, 10% and 12% in the last three years.

This, he attributed to “corruption underpinned by sole sourcing, scandal, ghost names, GYEEDA, SUBAH etc…this is not just corruption but corruption with impunity, by people of no fear…”

However, government officials claim the government is doing "smart borrowing", he said, adding that he "shudders"  when he ponders what the situation would be if borrowing had not been smart.

Source: The Finder