An Economist, Jerry Mofant, has sounded an alarm about a possible burst of Ghana’s economy next year because due to mismanagement.
Mr. Mofant, assesses that the government has already borrowed the country into an unsustainable debt position.
According to the economist, as the government’s insatiable appetite for loans continues to worsen its debt conundrum, international trade balance keeps growing negative and this keeps throwing debt affordability out of gear until it gets to a point when no foreign source would be prepared to lend to Ghana.
Since 2017, he points out, Ghana’s international trade balance, has been growing at a negative and this means that the country cannot afford to stop borrowing.
With a debt to GDP ratio projected to hit 76.7% in December, he points out that what this means is that the Debt to GDP ratio will continue to ascend, rather than reduce from 2021.
Meanwhile, revenue is not going to grow much. He points out that in the first quarter of next year, the government projects to raise Ghc13.3 billion.
However, the same government projects to spend Ghc24billion, meaning Ghc10.7billion of projected expenditure will have to be borrowed.
Now, if amortization of already existing loans is added, the government will borrow a whopping Ghc26billion more to add to the over Ghc260billion that is now an albatross on the country’s neck.
That is not all, Mr. Jerry Mofant also points out that Ghana’s energy sector debts are projected at US$12.5 billion by 2023 and somehow they must be paid.
According to the economist, that is not the only worrying trend that is on the hands of the country. He points out that since 2017, capital expenditure, which provides a basis for economic development has been dwindling. In 2016, the percentage of GDP allocated to capital expenditure was 4.7%. In in 2017 it reduced to 3.1%, then reduced to 1.6% in 2018 and further reduced to 1.5% in 2019.
“If your capital expenditure is reducing and your debt is growing what do you think will happen to the economy?” Mr. Mofat asked rhetorically.
He said, a systemic policy failure that has resulted from a culturalization of reckless borrowing by the current government, has put the country in a situation where on both the fiscal and monetary fronts, it is borrowing and pumping spending into the economy.
Already, international development partners such as the World Bank and the IMF have proffered doom for the Ghanaian economy and it is unclear how the next government administration will turn the situation around.