The Minority in Parliament has bemoaned the country’s rising debt stock, noting that the situation if not checked will put Ghana in the path to recession.
According to the Minority, despite the numerous loans obtained from the capital market to pursue various developmental projects, little has been achieved with majority of the loans either misappropriated or ending up in individual’s pockets.
Ghana’s total debt stock, which stood at GH₵53.1billion (US$24.5billion) as at end of December 2013, increased to GH₵79.6billion (US$24.8billion) at the end of December 2014.
Of the total public debt stock, external debt was GH₵44.5billion (US$13.9billion) while domestic debt amounted to GH₵35billion (US$10.9), representing 55.96 percent and 44.04 percent of total debt stock respectively.
According to the Minister of Finance, Seth Terkper, the country’s total debt stock as at May, 2015, stood GH₵90billion, representing 67.53 percent of GDP.
The amount is made up of GH₵53.8billion and GH₵36.2billion for external and domestic debt respectively.
Despite this, the country, on Tuesday, continued with its borrowing with Parliament approving four major loan facilities totaling US$606,080,000 and a further €17,310,000 secured from various financial institutions.
The institutions include the World Bank (US$150million), African Development Fund (US$56.80million), Kreditanstalt fur Wiederaufbau (KfW), Frankfurt am Main (€17.3million) and the International Development Association (US$400million).
But the Minority commenting on the various loan agreements said the trend of borrowing was becoming too much, arguing that its implications were enormous on the economy.
“The cost of borrowing hampers our sovereign guarantee. The cost is so huge. Borrowing is not good. If we are not careful, it is going to affect us badly. Because of the cedi depreciation we are going to pay more in the principal. Sooner than latter something will trip – if it is not in your interest rate it will be in your exchange rate – you cannot escape the economics -something else must be done and the indiscipline must stop,” the Minority Spokesperson on finance, Dr. Anthony Akoto Osei said at a press conference moments after the Minister of Finance had presented the Mid-Year Review of the Budget Statement and Economic Policy of the Government of Ghana for the 2015 Financial year to Parliament for adoption.
He said because of the excessive borrowing, the Bank of Ghana per the dictates of the IMF Program, cannot loan more than five percent this year with the rate expected to be zero in 2016.
Member of Parliament for Effutu, Alexander Afenyo-Markin, commenting on the matter wondered how loans procured by the government are utilized properly looking at the enormous financial indiscipline in the system.
“Mr. Speaker, is it the case that we are unable to raise sufficient revenue from taxation or that whatever monies we raise we are unable to spend same prudently? These are not free monies, they come at a cost. Can the Ministry of Finance and the Government tell us that with all the loans secured previously, same were prudently utilized?” he quizzed.
He added “loans were procured at a compound interest for a very laudable initiative and when money was procured in 2012 for afforestation, for gueinea fowl among others. Mr. Speaker as to what happened to these loans, only God knows. Come in December this year, the government is going cough GH₵299million. Meanwhile, we have nothing to show from what we procured the loan for.”