Deputy Finance Minister, John Kumah has dismissed claims by the Minority in Parliament that the government is plunging Ghana into deep economic crisis.
Speaking on Top Story on Monday, Mr Kumah admitted that Ghana’s debt level has risen but it is as a result of the coronavirus pandemic that swept through the world in 2020.
However, President Akufo-Addo throughout the period has been working to preserve the country and is set on reviving the economy, Mr Kumah told the host, Ernest Kojo Manu.
“It’s true we have gone back to high debt levels because Covid came and when Covid came it was a matter of everybody trying to keep their people safe. If you check in the first quarter of this year the economy has already grown 3.1% and it is looking positive,” he said.
The Deputy Finance Minister stressed that Ghana throughout Akufo-Addo’s term in office recorded the primary balance, which is an indication of the government’s net debt accumulation that shows how the overall debt of the country is, except in 2020 during the period of Covid-19.
“Between 2012 and 2016 what were the primary balances of the country? They (NDC) consistently posted a negative primary balance until they lost power in 2016, with a negative balance of 1.4%.”
“Check the record from 2017, the Akufo-Addo government posted positive primary balances. It is only in 2020 when Covid came that we posted the negative primary balance which everybody understands that Covid is an exceptional outlier situation.”
His comment follows calls by the Minority in Parliament for the government to seek immediate debt relief from the International Monetary Fund (IMF).
According to Ranking Member on Parliament’s Finance Committee, Ghana will face a deeper economic crisis, during which government will not be able to service its debt by February 2023, if the country does not apply for debt relief.
Dr. Cassiel Ato Forson told a forum in Accra, that Ghana’s debt to GDP ratio will hit 85% in 18 months from the current 73%.
“The Ghanaian economy has been driven into a ditch and will require an urgent fiscal measure to pull out from the ditch. We expect the government to seek urgent debt relief from the IMF,” he said.
However, Deputy Finance Minister John Kumah believes the country will not fall into the economic doom the minority is predicting, stating that President Akufo-Addo and his government would have revived the economy by then.
“The 18 months the NDC is talking about, we are going to use it to restore Ghana to positive fiscal indicators,” he said.
Associate Professor of Economics and Dean of International Programs at the University of Ghana, Legon, is optimistic the government has what it takes to repay its loans.
Also speaking on Top Story, Professor Eric Osei-Assigbey admitted that Ghana’s risk of repaying its debts is on the rise, however, the country has not reached a stage that calls for alarm with regards to its ability to settle its debts.
“There is a high risk of our capacity to repay our debts because it has been increasing. We have recorded about 53 per cent of our tax revenue in paying debts so there is a risk to that. But I don’t think that we are there yet.
“We are in a high-risk debt distress but the country still demonstrates a high capacity to repay its own as IMF puts it recently that the debt situation although is high, it is manageable and also has shown a great capacity to repay the loans.”