High Domestic Debt Batters Government

Seth Terkper, Minister of Finance, is currently implementing measures to refinance a portion of the country’s domestic debt to reduce the pressure it is placing on the budget.

At 52 percent, Ghana’s domestic debt was described as “not abnormal” by President John Mahama, who delivered his State of the Nation Address in Parliament recently.

He stated: “Our domestic debt and the current high interest rates are a major challenge to the economy.

“As a lower middle‐income country in transition to middle income status, we have an enormous need for credit to develop our social and economic infrastructure.

Commenting on what accounted for high imports in the country, Mr Mahama noted: “Mr. Speaker the result is that we are still largely dependent on the export of raw material, gold, cocoa, timber, oil and mineral exports and on the import of finished goods.

“That is still the basic structure of our economy. Mr. Speaker, a fundamental problem of our economy is that we do not make what we consume. This is the situation the late General Acheampong sought to address with the ‘Operation Feed Yourself’ and ‘Operation Feed Your Industries’ programmes, which were aimed at strengthening Ghana’s ability to be self-reliant.

“Mr. Speaker, in 2013 alone we spent a whopping amount of almost $1.5 billion in foreign currency on the import of rice, sugar, wheat, tomato products, frozen fish, poultry and vegetable cooking oils.

“Rice accounted for $374 million, fish $283.3 million, wheat $226.7 million, poultry $169.2 million, cooking oil $127 million, tomato products $112.1 million. Mr. Speaker, imagine if this money had been retained in Ghana.

Government continues to pay lip service to adding value to raw materials from Ghana.

The only answer the President could give to indicate his ability to tackle the problem was: “Mr. Speaker, as we all know, raw material exports are subject to price fluctuations on the international market. Countries that are dependent on raw material exports are therefore subject to wild cycles of booms and busts.”