Government’s mad rush for loans will hurt economy – Gabby

The Executive Director of policy think tank, Danquah Institute, Gabby Asare Otchere-Darko, is worried at the spate at which the ruling National Democratic Congress (NDC) is borrowing from international sources for its development projects.

He said the rush for loans will eventually hurt the economy if pragmatic measures are not instituted to ensure there is value for money.

Mr Otchere-Darko was speaking on Joy FM’s current affairs programme Newsfile on Saturday, where he explained that though he recognized the need to improve on the country’s infrastructure, he thought that was not to be done at inflated costs.

“Yes we need to accelerate our development but not when they are at inflated cost…” he pointed out.

Gabby claimed that Ghana’s debt stock since December 2008 had shot-up by about 50 percent – from about $8.2 billion to $12.2 billion and that the nation entered year 2011 with a lot of arrears from the GETFund, District Assembly Common Fund (DACF), National Health Insurance Levy (NHIL), as well as salary arrears.

Mr Otchere-Darko also criticised government on its insistence on the STX housing deal even when it was evident that the deal was a bad one, maintaining that government had failed to put to prudent use the nation’s limited resources.

“…something that can be built for about GHS10 is being sold to us at GHS20, that is not the way to run a country and that is not the way to go away from the HIPC situation that we went into in 2000…” he said.

The STX deal, according to Gabby, was a contributory factor to the debt government was accumulating for future generations and “at a rate that is not commensurate with our revenue mobilization”.

That is why “you need to also question the quality of debts you are accruing…, he said, describing the 1.5billion STX contract as an unnecessary debt.

“Nobody is saying borrowing is bad,” he stressed, “but we have to be careful; our rush for loans will hurt the economy as well.”

Responding to these concerns, Deputy Finance Minister Fifi Kwetey, who called into the programme, noted that it was not wrong for the country to incur debt.

He stated that what should be of concern was whether or not the loans being contracted were being channeled into productive ventures.

The deputy minister wondered why Gabby was complaining about the government’s borrowing, saying that he sounded hypocritical because his party, the NPP failed to invest wisely with loans when they had an opportunity to rule.

“Gabby don’t you forget that part of those debts that you are talking about is the 1.5billion debt that you left at TOR… So when you are talking about debt going up, please remember that we are paying your debt as well,” the Deputy Minister concluded.

Source: Myjoyonline.com/Ghana