Ghana’s debt has doubled

In a desperate attempt to rebut a story in the June 26, 2011, edition of the New Statesman which stated that Ghana’s debt had doubled under the Mills-Mahama NDC administration, a deputy Minister of Information, Samuel Okudzeto Ablakwa, in a statement issued Wednesday only but ended up confirming that Ghana’s total debt stock has in deed doubled in cedi terms.

According to the statement issued by the deputy Minister, Ghana’s total debt as of May 2011 stood at $13.4 billion, having grown from $8.1 billion at the end of 2008, representing a 65% increase in dollar terms.

However, what the deputy Minister failed to realise was that Ghana’s total debt of $8.1 billion left by the NPP at the end of 2008 works out to the equivalent of GH¢9 billion, considering the cedi-dollar exchange rate prevailing in 2008.

Fast forward to mid-May 2011 and the exchange rate prevailing would reveal that $13.4 billion works out to the equivalent of GH¢19.83 billion.

A simple mathematical calculation clearly shows, in fact, that Ghana’s debt in cedi terms has risen by 120.3%, more than double of Ghana’s debt stock under the Kufuor-led NPP administration.

Ablakwa, in his statement, also added that, “The debt to GDP ratio stands at about 35%. This ratio demonstrates that the nation’s debt is well within sustainable range, thanks to the prudent management of the economy by President Mills’ Economic Management Team.”

The assertion that Ghana’s debt-to-GDP ratio stands at 35% is also not true and smacks of mathematical dishonesty on the part of the deputy Minister.

According to the 2011 budget, Ghana’s nominal GDP for 2010 (using the old series) stood at GH¢26.159 billion, the equivalent of $18.17 billion.

Again, simply dividing Ghana’s 2010 GDP of $18.17 billion by the current debt of $13.4 billion shows a debt-to-GDP ratio of 73.4% and not 35% as the deputy Minister would want all Ghanaians to believe.

The nation’s current debt level of $13.4 billion is minus the $1.5 billion Korea STX housing loan, the $13 billion arranged Chinese loan facility, SADA’s $300 million that was announced just last week, the $600 million Opus 7 loan for the provision of 200 ambulances and the construction of 12 district hospitals and the $1.8 billion for the eastern corridor road.

Strangely enough, all the loans acquired by the Mills-Mahama NDC administration have repayment periods of 5 to 10 years and as such President Mills knows that another government, not his, would have to shoulder the responsibility of paying for these loans he is happily acquiring.

If the Mills-Mahama NDC administration continues along this path of reckless borrowing, soon there will be no money for wages and social services.

Already, spending cuts on all critical social welfare intervention programmes by the NDC in 2009 have been made this year, as over half a million Ghanaians fall below the poverty line in just two years.