While admitting that the previous Kufuor-led NPP administration also borrowed to undertake infrastructural development, he maintains the rate of borrowing is too alarming under the Mills-Mahama administration.
The leading NPP member fears of the possibility of the nation being plunged into the financial condition that left the previous New Patriotic Party government with no option than to declare the nation Highly Indebted Poor Country when it assumed power in 2001.
But, James Afedzi, Chairman Parliament’s Finance Committee, sees nothing wrong with the excessive borrowing, insisting: “ Ghana has the fiscal space to borrow and that is why we are borrowing”.
Statistics indicate that Ghana’s public debt continues to rise sharply. The debt stood at GH¢19.027 billion at the end of March 2011. This was made up of a total outstanding external debt stock estimated at $6.333 billion or GH¢9.500 billion (17.88 percent of GDP) and domestic debt stock of GH¢9.526 billion (17.84 percent of GDP).
The figure does not include the controversial STX deal which will cost the country $1.5 billion.
The total debt stock is estimated to be about 40 per cent of the country’s Gross Domestic Product.
Speaking to the New Statesman over the weekend, Mr Owusu-Agyeman described the trend as very alarming, explaining that it could have disastrous consequence for the nation in the long-term ‘since we may not have the capacity to service or pay the debt we continue to pile up.’
He expressed the fear that future generations woud be saddled with too much debt burden if the rate at which government is borrowing is not curtailed, adding that the time has come for Parliament to consider putting a ceiling on how much a government can borrow.
While conceding that every government requires funds to undertake its development agenda for the nation, Mr Owusu-Agyeman insisted : ‘there must be a limit to which a government can borrow. You can’t just say the space is borrow is there so you are just borrowing without thinking of the implication it will have on future generations.’
Earlier in an interview with Joy FM , the MP had criticized Parliament for not playing its oversight responsibility over the Executive as far as loan and financial agreements were concerned.
“Parliament has not been terribly effective in its oversight duties over the executive. Whichever government is in power, Parliament has not been effective,” he observed.
The MP cited the controversial STX loan costing $1.5 billion, for 30,000 housing units, and a potential $10 billion for 200,000 units, an investment he considers audacious and unprecedented.
“The moment you begin to acquire that much debt, and if you do not improve the productive capacities of the economy, if you don’t take care, you will establish a vicious cycle of always going into debt.”
But in the view of James Afedzi, Ghana as a developing country at the lower end of the middle income status needs to borrow more to undertake infrastructural development, especially the education, energy and road sectors.
“All these things put together means that as a country we still have to find ways to catch up with these issues,’ the Chairman of Parliament’s Finance Committee, explained on Joy FM.
Mr Afedzi rejected arguments that the NDC government is contracting excessive loans, explaining that the nation would not be able to attract loans if the lending countries were sceptical about the nation’s ability to pay back.
He insisted that the loans contracted by the NDC government had to be invested in productive ventures, adding that unless there was evidence to suggest that the loans had been diverted into other unproductive activities he was convinced the Mills administration was on the right track.
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