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On Wednesday, July 29, 2015, the Minority Spokesman on Finance, Dr. Anthony Akoto Osei, intimated at a media briefing in the House of Parliament in Accra, that at GH¢90 billion at the moment, the stock of public debt was becoming unsustainable.


The Member of Parliament (MP) for Old Tafo in Kumasi told the media that at the rate of government borrowing, this nation risks going the Greece way, and digging a deep hole from which this nation cannot emerge unscathed.

“At Ghana’s debt of GH¢90 billion, each Ghanaian owes GH¢3,500, and this could reach GH¢4,000 by the end of this year, because the current debt does not include $1.5 billion Eurobond that is expected to close by the end of September this year, and over $300 million recently approved by Parliament.”

He accused Finance Minister Seth Terkper of being disingenuous when he stood in Parliament during his mid-year review of the state economy recently, and told the people of Ghana that the government was living within its means, when the state had failed to fulfill its financial obligations to statutory organisations like the Social Security and National Insurance Trust (SSNIT), District Assembly Common Fund. and the Ghana Education Trust Fund among others.

This brought Mr. Terkper to his feet.
In a sharp rebuttal, the Finance Minister said loans taken have been invested in commercially viable projects that could repay the loans. “We are making progress…Our debt is sustainable,” he charged. “It is not about whether you take loans. If we are going to restore Dum-so, our budget cannot resolve Dum-so. Let’s face it.”

The man, whose duty it is to safeguard the state treasury, told Ghanaian nationals that the country must change course if it has to deal with the power crisis and some of the challenges facing it.

He discounted the notion that this nation would follow the Greek example and pile on debts that could never be repaid. He said the Mahama administration had changed course and devised ‘new strategies’, including a World Bank guarantee, to properly structure the nation’s loan profile.

The problem with the minister’s assertion is its credibility and reliability in dealing with the debt crisis facing the nation. Ghana’s debt to its Gross Domestic Product has long passed the Highly Indebted Poor Country initiative of 60 percent of GDP. Officially, this nation’s rate of borrowing has hit the 70 percent mark, and still counting.

When the National Democratic Congress Mark II administration took charge of the direction of this nation on January 7, 2009, the total debt owed to internal and external creditors stood at GH¢9.7 billion or 36.9 percent of GDP.

The tragedy of the debt pile up is that no one has accounted for how the huge borrowing has been used. Government communicators and party apparatchiks keep talking of development projects around the county being funded from these loans, but the so-called projects remain a mirage to ordinary Ghanaians. Like they say in this part of the world, Na Sika No Wo Hen?

Dum-so is in its fourth year, and nowhere near abating. Public Sector doctors have announced a nation-wide strike action over pay and allowances. Pharmacists in state medical centres are also voting with their feet. As you read this article, more than 2,000 nurses, who graduated from various nursing institutions throughout the country, cannot be posted, because the government is too broke to support their pay and other emoluments. This nation is on its knees.

In spite of Mr. Terkper’s protestation against the notion that mismanagement of this nation’s debt is approaching the Greece example, evidence on the ground seems to suggest that Ghana is on the same slippery slope Greece took to doom. Like Ghana, Greece’s problems started in 2009. According to information on Wikepedia, the world-wide web, the problem in Greece was triggered by structural weaknesses in the economy, and a sudden loss of confidence among lenders.

Fears developed about the Greece economy from 2009 about Greece’s ability to meet its debt obligations, due to the fact that previous data on the country’s debt levels and deficits might have been misreported by the Greece government. “This led to a crisis of confidence, indicated by a widening of bond yield spreads and the cost of risk insurance on credit details swap, compared to other European countries,” according to information on the world-wide web.

We are told that by 2012, Greece had the largest sovereign debt default in history. On June 30, 2015, Greece became the first developed nation to fail to make an IMF loan repayment. The Greece country is indebted to its creditors to the tune of 323 billion Euros.

Like Ghana, Greece is suffering from very serious trade imbalances. The country is importing more than it is ability to export. According to one literature: “Reports in 2009, of fiscal mismanagement and deception, increased borrowing costs; the combination meant that Greece could no longer borrow to finance its trade and budget deficit.”

This country has not reached the state where the international community would lose confidence in our ability to pay off our debts. The ability to raise $1.5 Eurobond and $1.7 billion cocoa syndicated money last year, means that there is still a modicum of respect for the Ghanaian economy. Evidence is beginning to emerge though, that the rate of borrowing might begin to court negative perception for the Ghanaian economy.

In October 2014, Standard and Poor reduced Ghana’s credit rating from B to B minus. This was quickly followed by Moody, which down-graded the country’s rating to B3, just below junk status. Fitch also gave Ghana a negative outlook, although it kept the rating at B.

The first real international bloody nose to the state economy was delivered by the Export and Import Bank of China in May, this year. In an official response to a loan request to construct three major road networks in the country, which are currently in deplorable states, the Chinese Exim Bank wrote a stinker to the Government of the Republic of Ghana.

The letter, signed by Mr. Ji Chun, Regional Director of the Chinese Government, said categorically that the Chinese concessional loan the country was seeking would increase Ghana’s debt burden. To add insult to injury, the Chinese said in their letter that the three road networks, for which this nation was seeking the loan to re-construct, did not merit the status of commercial roads.

“Having studied the documents for the above projects, we would like to advise you that according to the current guidelines by Chinese Government, the Chinese Government concessional loan and preferential buyer credit are mainly directed towards projects with good financial benefits and repayments abilities,” Mr. Chin wrote, virtually rubbing Ghanaian noses in the mud.

The sad truth is that Greece and Ghana have a lot in common. Both countries suffer from serious trade imbalances. In Ghana, we are importing everything under the sun, while exporting very little.

Last week, it emerged that the ailing cocoa industry, which is still exporting the beans in its raw state, has once more emerged as the leading export earner in Ghana. What this means is that this nation is failing in its bid to diversify our export drive. The danger of relying on cocoa is that most of our farmers are aging.

Young enterprising men and women are abandoning the rural communities, where most of our cocoa farms are located, and flocking to Accra, Kumasi, Sekondi Takoradi and other urban areas where job opportunities are virtually non-existent. The fear is that there might come a time when there could be very few cocoa farmers to give this nation the yield to export.

Like the Greece Government, those who direct the state economy of Ghana have been caught lying about the state of the economy to the IMF and the World Bank, increasing the risk of courting negative perceptions on how the Ghanaian economic books are kept.

The stark fact is that at almost 70 percent of GDP, public debts are already weighing down on the economy. At the moment, the state is required to fork out as much as GH¢12 billion to pay interest on our loans this year.

For most Ghanaians, that translates into non-availability of funds for infrastructure development and the general improvement in the quality of life at the centre of the earth. It means that the dreaded Dum-so will continue to disrupt the economy.
I shall return!