Finance Minister Ken Ofori-Atta has sparked more fears about the current government’s huge appetite for debt by saying Ghana’s borrowing habit is a necessity that would not be detrimental to the economy.
“I think we’re at 60 per cent if you include our energy and financial services intervention you axe that and you’re around 58, 59%. The challenge really when you look at the Asian countries, etc. is not that you shouldn’t borrow. How do you then move to an export-driven economy such that our net international reserves coverage is not four months but its two years or it’s three years so that the vexing issue of currency depreciation does not occur?” he said in an interview on Saturday with Joy Newsfile.
Mr. Ofori-Atta’s statement is coming just a few days after the International Monetary Fund (IMF) and the World Bank have warned that Ghana’s debt addiction is pushing it to the level of a highly indebted country (HIPC).
A new IMF staff report has said Ghana is closer to being classified as a high debt distressed country with unsustainable debt levels that threatens its ability to honour its international obligations.
Ghana’s current public debt stock is approximately GH¢215 billion. Which is more than 61 per cent of the country’s gross domestic product (GDP).
Out of this figure, the current administration of President Akufo Addo has racked up a whopping GHC 102 billion within three years, and still counting.
This unbridled borrowing of the Akufo Addo administration means that even though Ghana barely mobilised GHC 58 billion in 2019 in domestic revenues, it doled out almost GHC 19 billion to service debt that year.
According to the Finance Minister in a rather curious confidence, told Newsfile that the debt levels should be no cause for alarm
“I think the issue is not that we should not borrow; we should borrow with care and if you look at our bit surplus, for example were around 2billion dollars net. So your challenge is to get appropriately priced funds at the right time to be able for you to do your transformation exercise which will then generate your resources,” he explained.
He said, just like any other country, Ghana borrows because it wants to “inject resources into the economy with the expectation that that will enhance productivity.”
This posture is a complete U-turn from the assurances given Ghanaians prior to the winning of the Presidential elections by the New Patriotic Party (NPP). It key economists vehemently condemned rampant borrowings.