General News of Monday, 16 February 2015
The New Patriotic Party (NPP) Vice Presidential candidate, Dr. Mahamudu Bawumia, has noted it is sad that the current government seems not to even know how much it has borrowed since it assumed office in 2009, describing the situation as the height of economic mismanagement.
Speaking to students of the Navrongo Campus of the University of Development Studies on Saturday, Dr. Bawumia said it was understandable why the government had mismanaged the mind-boggling resources it had borrowed since it did not seem to even know the value of how much it borrowed.
Challenging the government’s claim that it has borrowed a whopping $17 billion and not $27billion, Dr. Bawumia said: “Unfortunately the government is claiming that it has only borrowed the equivalent of some $17 billion and not the $27 billion. It is very sad for the government to fail to admit the obvious truth in this regard. If as a government you actually do not know how much you have borrowed, then your competence must be under serious questioning.
“You must know the value of how much you actually borrowed if you are to manage it properly. If you claim you have borrowed five dollars when you have actually borrowed 10 dollars, then you would have a problem in managing the money to build the returns needed to repay the 10 dollars.”
Speaking on the reckless borrowing spree of the government since it assumed office, Dr. Bawumia went further to explain to the students why the government was so wrong in its claim that it has borrowed $17 bn.
“Let me explain to you the untruthfulness in the government’s argument in a simple example. Assume that today the exchange rate of the cedi to the dollar is 1:1. If you borrow GH¢100 today, it would mean that you have borrowed the equivalent of $100 dollars and you should be able to do projects worth $100. If in a few years the exchange rate depreciates to 3 cedis to one dollar, then the 100 cedis you borrowed a few years ago would be worth some $33.
“This does not, however, mean that you did not borrow the equivalent of a $100 dollars initially and we should expect to see a $100 worth of projects. You cannot suddenly claim that you actually borrowed $33 a few years ago and so you are only to account for $33 worth of projects. Using current exchange rates in determining the equivalent amount borrowed is misleading because it ignores the value of the debt at the time it was borrowed,” Nana Akufo-Addo’s running mate in the 2016 elections explained.
Dr. Bawumia stated that with this in mind, Ghanaians expect to see $27 billion in projects since that is the value of the debt they have accrued in the last six years.
The NPP Vice Presidential Candidate noted that if the government had managed the huge borrowing competently, just a minute fraction of that money could have solved Ghana’s energy problems totally and that the mismanagement of the huge resources that the government has accrued in the last six years is the only reason why Ghana is currently in the mess it finds itself, with the government virtually broke.