Kwaku Kwarteng: Ghana’s economy managed like a “Ponzi Scheme”

Kwaku Kwarteng, a former Deputy Finance Minister and Member of Parliament for Obuasi West in the Ashanti Region, has made a striking comparison between the management of Ghana’s economy and a Ponzi scheme.

He attributes the nation’s current economic challenges to decades of poor governance, political mismanagement, and economic inefficiency across various administrations.

In a statement issued on Thursday (25 July) titled “To break the eight, we must first break the norm,” Kwarteng addressed his party, the governing New Patriotic Party (NPP), and all political parties.

He highlighted that Ghana has consistently overspent since gaining independence and relied on borrowing to cover the excess, leading to a precarious economic situation.

“We always offer higher interest to lenders, borrow more, use a part to repay previous debts, and the rest to pay for the current year’s overspending. So, we have been running our country’s economy like a Ponzi scheme. The economy is struggling today because lenders are now refusing to lend to us. It is just like a Ponzi scheme going into crisis once people stop depositing their monies with them,” Kwarteng explained.

The former chairman of the Finance Committee in Parliament expressed concern that if Ghana continues on its current path, its democracy could collapse along with all political parties. He urged the political class to recognize this reality and change their behaviour, emphasizing that time is running out for Ghana.

Kwarteng criticized the prevailing political norm, where parties going into elections focus on praising past achievements and making high-sounding promises while painting opponents in a negative light.

He argued that this approach has led to election campaigns being reduced to bitter struggles for power rather than focusing on the future of the country and its children.

The urgency of Kwarteng’s message is underscored by the recent revelation of Ghana’s escalating public debt.

During the mid-year budget review presentation to Parliament, Finance Minister Dr. Mohammed Amin Adam disclosed that Ghana’s debt had reached GH¢742.0 billion (US$50.9 billion) by the end of June 2024.

This represents 70.6 percent of the country’s Gross Domestic Product (GDP), with an increase of 22.0 percent attributed to cedi depreciation and ongoing disbursements from creditors.

Out of the total debt, GH¢452.0 billion is external debt, accounting for 60.9 percent, while GH¢290.0 billion is domestic debt, making up 39.1 percent. As a percentage of GDP, external and domestic debt represented 43.0 percent and 27.6 percent, respectively.

SOURCE: DAILY MAIL GH