Economist Dr. Owusu Sarkodie has said the current government is repeating the errors of the previous one committed in terms of the rate of borrowing.
According to him, the current government was borrowing almost at the same rate as the previous government did, for which the latter was criticized.
Speaking on TV3’s Business Focus Monday, the economist noted that the economy was not getting better as expected.
“In fact the four years of the previous administration, they added about GHȻ 88 billion; this present administration is adding more than GHȻ 88 billion in this short term so in terms of value, it is going up,” he said.
He therefore tasked government to do better than they are doing in order to stabilize the economy.
According to the Bank of Ghana, the country’s total debt has risen from GHȻ153.4 billion in May 2019 to GHȻ 200 billion by July 2019.
The Bank of Ghana has stated in its Monetary Policy Committee’s report that the country is in a good fiscal space in terms of the debt to GDP ratio, but highlighted that Ghana was vulnerable to external shocks due to the high external debt component.
Dr. Sarkodie expressed concern at the trajectory of the rising public debt, adding that government was using about 42 per cent of the total tax revenue to service interests on loans, and not even the principal.
“We cannot as a country continue on borrowing and then when the two parties meet, somebody is saying you borrowed more than me. That shouldn’t be the case. It should be about I reduced the public debt and I raised resources domestically more than you.
“Other than that, we cannot do anything. As we speak, the capital expenditure has been reduced to 28%. Roads are not being constructed, as they used to, hospitals are not built as they used to, the infrastructural development are all not going as we expected,” he noted.
On the foreign component of the public debt, Dr. Sarkodie explained, “The issue is that we have domestic bonds which are foreign owned, and anytime there is a problem with the exchange rate, it impacts on the external debt as well as the portion of the domestic debt which is foreign owned.
“There is no substitute for domestic resource mobilization,” he said.
By Paul Selorm Agbo|3news.com|Ghana