Ghana’s steep Rising Debt and the need for urgent brakes

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The  GHC80  Billion  Debt  So  Far

It  is  official!  Government  has  borrowed  about  GHC80  billion  in  record  time,  and  there  is  very   little  to  show  for  this  gargantuan  addition  to  the  indebtedness.  The  debt  has  risen  from   GHC122  billion  from  Independence  till  2016;  to  almost  GHC200  billion  in  2019.

Yes,  in  less  than  three  years,  President  Akufo-­Addo’s  Government  alone  is  responsible  for   about  40%  of  Ghana’s  current  total  debt  burden  since  independence.  In  effect,  whereas  the   mantra  is,  “Ghana  Beyond  Aid,”  the  real  mission  is,  “Ghana  Begging  for  Aid.”

Obviously,  as  sad  as  it  is,  the  Government  regardless  is  blatantly  burrowing  the  pit  of   borrowing,  and  if  not  stopped,  it  means  Ghana’s  present  and  its  future  is  being  buried  with   each  passing  loan  agreement.

George  Carlin  once  observed,  “I  think  we  ought  to  just  go  ahead  and  make  “zillion”  a  real   number.  “Gazillion,”  It  seems  to  me  it’s  time  to  do  this.”

Yes!  George,  you  were  right  in  the  context  of  Ghana’s  present  indebtedness,  and  I  share  in   your  thoughts  because  twelve  years  ago  (2007),  in  one  fell  swoop,  Ghana  cleaned  four   zeroes  (0000)  when  she  redenominated  her  currency.  But  for  that  singular  exercise,  your   prediction  could  have  come  to  pass  considering  the  spate  of  borrowing  that  we  have   witnessed  in  the  past  two  and  a  half  years.

The  Hidden  Debts 

our  debt  situation  is  much  higher  than  the  reported  figure.  Like  many  Ghanaians,  I  am   concerned  about  Ghana’s  indebtedness  because  characteristic  of  all  economic  indicators,   there  are  limitations;   and  for  national  debts   which  fuel  budget  deficits,   one  of  such   limitations  is  hidden  debts  or  what  Mankiw  (2013)  terms,  “uncounted  liabilities.”

For  example,  hidden  debts  include  pensions  which  are  basically  deferred  compensations  or   ‘loans’  which  Ghanaian  workers  have  issued  to  Government  with  an  expectation  for  their   retirement  income  security.

Indeed,  at  the  2019  May  Day  Celebration,  various  workers  bemoaned  and  warned  against   Government’s  huge  indebtedness  to  their  pension  funds  and  also,  the  attempts  to  tamper   with  the  CAP30  pension  of  security  services.

Furthermore,  another  hidden  debt  is  contingent  liabilities  which  arise  from  Government   guarantees  such  as  the:

Ø   Collateralization  of  the  Ghana  Education  Trust  Fund  (GETFund);

Ø   GHC2  billion  Ghana  Amalgamated  Trust  (GAT)  for  some  collapsed  banks;

Ø   Over  GHC4.7  billion  Energy  Sector  Bonds;  and

Ø   US$600  million  Sinohydro  facility  which  is  scalable  to  US$2  billion  among  others.

Where  Is  The  Money?

Most  often  when  Governments  have  been  confronted  with  the  question,  “where  is  the   money?”  their  default  position  has  been  to  list  specific  and  tangible  programmes  and   projects  to  account  for  what   they   have  borrowed.   Also,  debt  refinancing  has  been  a   standard  answer.  However,  in  the  case  of  the  present  administration,  there  is  very  little  to   show  for  the  gargantuan  GHC80  billion,  which  they  have  borrowed  over  the  past  two  and  a   half  years.

So,  they  have  often  sought  to  justify  their  unprecedented  consumption  related  expenditures   with  the  constitutionally  stipulated  Free  Senior High  School  programme  which  has  visited   the  “Double  Track  System”  on  students  and  parents.  I  am  not  against  free  S.H.S.  How  could  I   a  Social  Democrat  whose  tradition  superintended  over  the  1992  Constitution?

But,  their  mathematics  do  not  add  up  when  one  contextualises  the  total  expenditure  on   Free  SHS  with  the  quantum  of  tax  and  non-­‐tax  revenue  which  has  accumulated  under  this   administration  –  thanks  to  John  Mahama’s  visionary  and  multi­‐sectoral  ingenuity,  including   his  strategic  investments  in  the  hydrocarbon  industry.

Examples  of  such  new  and  additional  revenue  streams  that  have  come  on  board  since  the   NPP  Government  assumed  office  include:  proceeds  from  the  ENI/Sankofa  fields;  the  Energy   Sector  Levy,  among  others.

Additionally,  the  “annoying”  Luxury  Vehicle  Tax;  the  surreptitious  and  backdoor  increase  in   the  rate  of  VAT;   and   the   extension  of  the  duration  of  some  other  taxes   all  by  this   Government  who  slyly  promised  to  move  Ghana  from  taxation  to  production  have  also   generated  more  revenue.

So  what  at  all  is  the  problem  of  this  Government  that  neither  encountered  the  crippling   ‘dumsor’,  nor  faced  almost  a  year-­‐long  needless  election  petition?  What  is  their  excuse?   …and  so  I  ask  again,  “Where  is  the  money  and/or  what  has  it  been  used  for?”

The  Great  Deception    

Over  and  above  the  germane  question,  “Where  is  the  money?”  what  is  even  more  worrying   and  deceptive  is,  the  President’s  unenviable  borrowing  record  flies  in  the  face  of  his   passionate  and  emotional  appeal  which  he  deployed  to  persuade  Ghanaians  in  the  run-­‐up   to  the  2016  elections.

He  argued  in  ‘Twi’  that,  “Yεte  sika  so  nanso  kɔm  de  yɛn.”  Simply  put,  he  meant  amidst  the   abundant  resources,  locally,  Ghanaians  are  hungry.

Furthermore,  it  is  important  to  situate  his,  “Yεte  sika  so  nanso  kɔm  de  yɛn”  speech  within  his   Vice  President,  Dr.  Bawumia’s  popularly  known  saying  that,  he  had  worked  at  the  Bank  of   Ghana  before  and  so  he  knew  Ghana  is  rich…or  vice  versa.

These  statements  were  some  of  the  many  but  hollow  counter-­‐arguments  to  the  prudent   and  smart  borrowing  strategy  which  yielded  significant  beneficial  projects   under  His   Excellency  John  Dramani  Mahama.

Some  of  these  beneficial  projects  include  Ridge  Hospital,  University  of  Ghana  Medical   Centre,  Upper  West  Regional  Hospital,  800-­‐kilometres  Eastern  Corridor  Fibre  Optic  Project,   National  Data  Centre,  Accra  Digital  Centre,  Community  Day  Senior  High  Schools,  Kasoa   Interchange,  among  others  across  the  country.

Undoubtedly,   Nana  Akufo-­‐Addo  saw  the  various  development  projects  which  his   predecessor,  had  efficiently  churned  out  in  record  time;  hence  must  not  be  borrowing  at   this  rate  contrary  to  their  own  electoral  promises.

I  do  not,  at  all,  suggest  as  James  Madison  wrongly  did  that,  “A  public  debt  is  a  public  curse.”   No!  On  the  contrary,  I  subscribe  to  Alexander  Hamilton’s  proposition,  which  states  that  “A   National  debt,  if  not  excessive,  will  be  to  us  a  national  blessing.”    The  emphasis,  here,  is  on   “excessive”.

I  also  share  the  views  of  many  Ghanaians  who  believe  the  GHC80  billion  indebtedness  in   record  time  with  virtually  nothing  to  show  for  is  painfully  “excessive”,  no  matter  which  way   you  look  at  it.

Indeed,  but  for  the  recent  rebasing  of  Ghana’s  economy,  which  is  either  luring  or  deceiving   Government  to  borrow  recklessly,  the  current  debt  to  GDP  ratio  would  have  made  Ghana  a   “Highly  Indebted  Middle  Income  Country  (HIMIC),”  ‘Bawumia  (2015)’  –  for  want  of  a  better   categorisation.

Sadly,  the  great  deception  did  not  end  in  opposition  but  has  continued  in  Government.

Only  a  few  days  ago,  the  Finance  Minister  –  Mr.  Ken  Ofori  Atta  –  deceptively  asserted  that   “…aid  is  not  borrowing…”  I  invite  him   to  read  Hall  and  Midgley,  (2004:262),  of   the   London  School  of  Economics,  on  how   concessional  loans  also  qualify  as  aid.

In  addition,  regarding  Mr.  Ofori  Atta’s  epiphany  that,  “borrowing  is  not  bad  if  you  have  the   resources  to  be  able  to  pay  it  back  and  the  balance  that  you  achieve…”  I  am  tempted  to  side   with  those  who  find  it  condescending.

Moreover,  his  suggestion  that  the  ability  to  pay  for  loans  should  be  a  matrix  of  relevance  in   judging  the  efficacy  of  loans  is  in  itself  drenched  in  inconsistency.

Therefore,  I  have  just  four  rhetorical  questions:

Ø   Is  it  not  strange  that  the  party/Government  that  claims  to  have  an  economic  team  of   ‘gurus’  unmatched  in  the  history  of  Ghana  are  only  now  realising  that  not  all   borrowing  is  bad,  now  that  they  find  themselves  out-­‐borrowing  every  Government   in  recent  history?

Ø   Did  the  Finance  Minister  share  this  very  advice  with  Dr.  Bawumia  and  Nana  Akufo-­‐ Addo  when  they  were  in  opposition?

Ø   Apart  from  General  Ignatius  Kutu  Acheampong  of  “Yεn  tua”  fame  who  blatantly   declared,   Ghana  will  not  meet  its   international   debt  obligations,  is  there  any   Government  of  Ghana  in  recent  memory  who  has  acted  in  similar  manner?

Ø   Finally,  is  Mr.  Ofori  Atta  not  abundantly  aware  that  his  predecessor,  Mr.  Seth   Terkper  was  compliant  to  the  extent  that  before  he  left  office,  he  made  provision  for   the  2017  planned  repayment  of  the  Eurobond  which  the  Kufour  administration   contracted  in  2007?

Perhaps,  if  he  had  answered  these  questions  sincerely  and  truthfully,  Ghanaians  would  have   been  spared  his  latest  views  on  borrowing.


In  conclusion,Nana  Akufo‐Addo has  plunged  Ghana  into  an  unending  vortex  of   unprecedented  debt  contrary  to  his  promise  in  2016;  this  amounts  to  deception;  and  yet  he   has  very  little  to  show  for  the  GHC80  billion  borrowed.

Furthermore, the  irreconcilable  differences  between  their  own words  that,  Ghana  has  so much  resources  and  hence  does  not  need  to  borrow  vis-à-vis the  evidence  that  indeed, they  are  borrowing  excessively,  is  unacceptable.

Simply  put,  this  Government  has  broken  the  sacred  trust  upon  which  they  were  elected  into   office.  The   GHC80billion  unenviable  debt  record   is  undermining   the   much  discredited “Ghana  Beyond  Aid”  mantra,  and  also  threatens  the  development  of  present  and  future   generations  of  Ghanaians.

President  Akufo-­‐Addo  must,  therefore,  take  responsibility  and  apply  the  brakes  on  his   borrowing  strategy,  which  is  burying  Ghana.

Dr.  Edward  Kofi  Omane  Boamah  

Former  Minister  for  Communications  &  Presidential  Spokesperson  

4th  June,  2019  

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