Ghana’s fiscal challenges and growing high public debt is likely to force the country to seek yet another bailout from the International Monetary Fund (IMF), the Minority in Parliament has predicted.
As the country ended a three-year extended credit facility with the IMF in April last year, President Nana Akufo-Addo assured government would ensure fiscal discipline to avoid seeking assistance from the Breton wood institution.
But barely two years on, the Minority claimed the “populist policies” by the government has come full cycle and thrown the country’s fiscal consolidation made under John Mahama, out of gear.
Addressing a news conference Tuesday on the back of the 2019 mid-year budget review by the Finance Minister Monday, Ranking Member and minority spokesperson on Finance, Cassiel Ato Forson, held “public finances are in dire straits”.
For the minority, the government’s resort to additional tax measures as announced in the mid-year budget review by the Finance Minister “is an indication of the troubling times that we are in”.
“It has become obvious that the NPP has no intention of keeping their promises to Ghanaians when it comes to borrowing and the public debt, the imposition taxes, fuel price adjustments and the resolution of the general hardships facing the people,” Mr Ato Forson said.
He said the mid-year budget “only offers gloom and portend very difficult times for all Ghanaians”.
For the minority, the Akufo-Addo government ought to change their course else they will plunge the economy into much bigger challenges.
The mid-year budget review, the minority said, has shown that Ghana’s public debt has risen sharply from 120 billion cedis as of December 2016 to 204 billion cedis as of June 2019.
This represents an increase of about 84 billion cedis in the last two and half years under President Akufo-Addo, the minority said.
“This has brought the debt to GDP ratio to 59.2 per cent from 55.6% in December 2016 even with the benefit of a rebased economy,” Mr Forson stated.
He described as surprising and cosmetic, the positive primary balance posted by the government for two consecutive years, at a time that the public debt has ballooned to 204 billion cedis.
“This has clearly exposed this cosmetic approach to fiscal accounting,” he said.
On government’s borrowing, the minority project that based the public debt will reach 220 billion cedis by the close of the 2019 fiscal year.
The minority claimed that will mean that in three years, Akufo-Addo would have added 100 billion cedis to the public debt.
“We wish to stress that this only represents what has been added since 2017. In all, President Akufo-Addo has borrowed about GHS 160 billion (not what is added to the public debt) since 2017 with part of it used for debt reprofiling,” Mr Forson said.
Again, he said the public debt would exceed the projected GHS 220 billion, once draw-down begins for a number of loans approved by Parliament.
He indicated that “this rapid increase in the public debt level means that we have reached a point of debt unsustainability, a fact confirmed by the World Bank Country Director”.
“This also is at variance with what the President and his party told the people of Ghana in opposition. They created the impression that they could govern the country without borrowing and that even if they borrowed at all, the funds would solely be channelled into capital investments.
“After adding GHS 84 billion to the public debt, President Akufo-Addo cannot point to any significant capital investments made over the last three years. Almost all of the borrowed funds have gone into consumption related expenditure,” Mr Forson claimed.
By Stephen Kwabena Effah|3news.com|Ghana