Vice President, Dr. Mahamudu Bawumia, has rejected claims that government’s numerous flagship programmes are to blame for Ghana’s worsening debt situation and the subsequent International Monetary Fund (IMF) support request.
He said government expended GH¢15.6 billion on the flagship programmes within five years; as such they cannot be responsible for the country’s ailing economy.
Dr. Bawumia said factors such as the Covid-19 pandemic, banking sector clean-up, and the energy sector capacity payment pushed Ghana’s total debt to some $54.5 billion.
He explained that in the midst of the worsening economic challenges, the government’s options for generating enough revenue were limited, forcing the country to run to the IMF for support.
“Some commentators and analysts have argued that Covid-19 expenditures by government alone cannot be the cause of the large increase in the fiscal deficit and debt stock. In fact, they are right. Covid-19 expenditures alone are not the reason for the large increase in Ghana’s debt stock. In addition to covid-19, there are two others that are critical in understanding the evolution of fiscal deficit and debt stock. They are the banking sector clean-up and the energy sector excess capacity payment.”
“The excess capacity payment of GH¢17 billion relates to a legacy of take or pay contracts that saddled our economy with annual excess capacity charges of close to $1 billion a year. These were basically contracted to supply energy to Ghana.”
The Vice President noted that the expenditure on these three “exceptional” items is over 3 times more than what has been spent on government’s flagship programmes.
“To put these three expenditures in context, we have to juxtapose them with some of the governments flagship projects. The Free SHS, the 1D1F, Planting for Food and Jobs, the Ghana card, Zongo Development Fund, NABCO, Teacher Training Allowance, and Nursing Training allowance. The data shows that the expenditure on these programmes over a 5-year period amounted to GH¢15.6 billion. And this is compared to the GH¢54 billion expenditure on the three exceptional items.”
The Vice President said the National Democratic Congress is partly responsible for the internal factors driving Ghana’s debt situation.
“Of the four factors, Covid-19 and the Russia-Ukraine war were external. The other two, the banking sector clean up and the energy sector capacity payment were results of the previous government.”
He was speaking at the launch of the two new high-level information technology programmes at the Accra Business School at Baatson in Accra.
Meanwhile, the International Monetary Fund (IMF) has reaffirmed its commitment to support Ghana following the conclusion of its visit to the country.