Ghana Cedis
Remarks from both politicians and others regarding the country’s debt have made it one of the most abrasive subjects of debate in the country today and, rightly so.
A report in our sister paper, Business Guide last week suggested that Ghana’s public debt rose sharply in the first quarter of 2011 to hit GH¢19.02 7 billion, as compared to GH¢17.2 billion at the end of December 2010, constituting the equivalent of about 40 percent of the country’s Gross Domestic Product. This, according to Dr. Joe Abbey, head of the Centre for Policy Analysis (CEPA), excludes unofficial debts.
Total outstanding external debt stock at the end of March 2011 was provisionally estimated at $6.333 billion or GH¢9.500 billion (17.88 percent of GDP), an increase of $214.99 million from the level of $6.118 billion in December 2010.
Domestic debt at the end of March 2011 was however GH¢9.526 billion (17.84 percent of GDP), GH¢1.246 billion higher than the December 2010 stock of GH¢8.3 billion.
To pretend it is not worth the candle is to play the ostrich and await the negative consequences that will follow sooner or later.
Our HIPC experience is still fresh in our memories. That was an inevitable option for the country; a situation occasioned by a reckless management of the economy bequeathed former President Kufuor by his predecessors.
We do not want to go back to HIPC, although it saved us from a number of economic embarrassments as a nation, but from the way we are piling up the debt, we could be considering that option in the near future.
Musing over the situation recently, some public sector personnel have posited that a greater proportion of the debt could be settled within the next ten years or beyond, a pointer that something is really amiss.
We do not understand why a three-year-old government would incur so much debt within such a short period.
Unless we go back to the drawing board to chart another way of managing the development agenda of the country, the continuous reliance on external sources would do us more harm than good.
We can smell a certain dosage of financial lethargy on the part of the managers of the economy who, as currently constituted, prefer raising loans from external sources, abandoning totally any idea of looking inwards for funding of the development agenda.
Going for loans cannot be completely ruled out; it is only when such an option is turned into a rule, as we currently have on our hands, that we begin to get jittery.
It is important that we exercise some caution when going for such loans instead of the seemingly reckless approach.
Future governments would pay dearly for this reckless management and make it impossible for them to undertake their programmes.
History is replete with stories about how such recklessness and consequent debt entrapment have led to social unrests and a further erosion of the economies of victim countries.
If only Greece were not engrossed in her predicament, she would counsel us to be wary about what we are doing. That country has today suffered a dwindled investor-confidence and a reduced capital inflow among other economic challenges. Our proclivity for foreign loans is, without doubt, being incited by the glare of our newfound oil economy. We have forgotten about the vicissitudes of this industry.
We need to ensure a proper husbanding of the economy to obviate dangerous challenges in the medium term especially.