Ghana’s debt has not doubled-Gov’t

Government has disclosed that Ghana’s total debt as of May 2011 is $13.4bn. The national debt at the end of the 2008 Financial Year was $8.1bn.

A statement signed by Deputy Minister for Information, Samuel Okudzeto Ablakwa, therefore described as “yet another disappointing lie” claims that the country’s debt portfolio has doubled within two years.

According to him, the Mills administration unlike the NPP has demonstrated that funds borrowed and which will be paid for by the state must be used for worthwhile projects that benefit the people and for which repayment will not cripple the economy and the people.

The debt to GDP ratio stands at about 35%. This ratio demonstrates that the nation’s debt is well within sustainable range, thanks to the prudent management of the economy by President Mills’ Economic Management Team. It is that prudency, the statement noted, that has achieved for Ghana within two years the macro-economic feats that the NPP struggled to achieve in vain for eight long years.

“As a social democratic party, the NDC has always held the view that it is not about how much you borrow, but the projects for which you borrow and the efficient utilization of the borrowed funds,” the statement explained.

Government, it noted, has over the last two years concentrated on infrastructure expansion in the areas of health care, education, roads, and energy among others. This it says is a far cry from the recent past when expensive facilities, notably the $750million Eurobond, were not used for any major infrastructure work to bring about a significant infrastructural boost to the economy. 

“For a facility that was so expensive to pay back at 8.5% per annum with a 10-year payback time, the NPP used the $750m to procure prepaid meters, locomotives when rail tracks had not been constructed, AGC shares and payment of salaries. This unfortunate misapplication of expensive debt resulted from the NPP government’s inability to ensure the readiness of critical feasibility studies for projected infrastructural projects before securing the facilities.”

The statement also noted that for Ghana to grow at the expected rate, it needs to expand and improve its infrastructure for which there is the need for increased financing. Government will therefore continue to access financing but in a manner that best serves the interest of the people.

It is also important, the statement said, that Ghanaians know that while the NPP claimed that it came to meet a national debt of 40 trillion old cedis in 2001, at the end of 2008, the country’s debt was $8.1bn (which is more than 100 trillion old cedis or GH¢10 bn). This was despite the fact that under HIPC, $4bn (or more than 40 trillion old cedis) of the country’s debt was wiped off.

“It will be interesting to hear the NPP tell us what occasioned the above development and also how they expected government to finance the repayment of the difficult financing arrangements they entered into like the Eurobond”, Mr. Okudzeto Ablakwa added.

Source: Ministry of Information, Accra