Member of Parliament for Bolgatanga Central, Isaac Adongo, has said it is worrying that debt service alone takes about 91% of Ghana’s tax revenue leaving only 9% for spending on everything else.
According to him, what is even more worrying is that the situation is self-inflicted by the Akufo-Addo government which has recklessly been borrowing.
Speaking at the eleventh leadership dialogue series, he lamented that the government’s reckless borrowing, really worsened from 2019 when debt service as a percentage of tax revenue exceeded 70%.
With the trajectory not changing, he said debt servicing will reach 91.6 percent in 2022.
Hon. Adongo spoke on the theme: ‘Transforming Ghana’s Economy – Scapegoats, Root Causes & Hard Choices’ at 11th Leadership Dialogue Series (LDS 11) organised by the Centre for Social Justice (CSJ),.
Meanwhile, as the government’s reckless borrowing dug Ghana deeper into debt, it also took to cosmetic fiscal deficit reporting since 2017 to paint a nice picture.
“As previously stated, several alien schemes are explored by the government to artificially suppress the fiscal deficit.
This purpose has however not been achieved because the IMF which the government is courting for an urgent $3 billion bailout has keenly followed development within Ghana’s public finances.
“After 2017, Ghana’s fiscal deficit as reported by the IMF was on the rise, reaching 7.3% of GDP by 2019, an indication that our public finances were worsening.
“Government ignored these signals and consistently reported cosmetic fiscal deficits which was not a true reflection of the state of public financing in Ghana. Ghana’s public finance management stated deteriorating even before covid-19”.
He said the quantum of the public debt in comparison of the development from government raise serious questions regarding how the money borrowwd was used.
“Thus, when Ghana’s public debt grows from about GHC120 billion to about Ghc400 billion in just five and half years, legitimate enquiries must be made into what the monies were used for when we have very deplorable roads, kids in Senior High School (SHS) are running double track systems, new hospitals have not been built and the old ones ill equipped to deliver fit for purpose health care etc”, Mr Adongo said.
On his part, the Dean of the University of Cape Coast School of Business, Professor John Gatsi warned the government that judgment debt must be watched as such payments return no value for debt in terms of infrastructure such as schools, hospitals, water systems and irrigation, among others.
“It is payment in some cases for poor judgement, disrespect for the tenets of rule of law, ill-prepared contract management and discriminatory handling of contracts due to perceived political affiliation”.
Prof Gatsi who is also a Chartered Economist and Barrister, reiterated that Ghana’s economy is distressed due to high unsustainable public debt, low revenue performance, troubling macroeconomic environment, fiscal dominance, neglect of the potential of modernised agric and inefficient spending, and high interest payment.