Economy: Mahama won’t use quick fixes like NPP did – Kofi Adams

General News of Tuesday, 10 March 2015


Kofi Adams Gen Sec

The governing National Democratic Congress (NDC) says it will not allow itself to be railroaded by the main opposition New Patriotic Party (NPP) into adopting quick fixes towards getting the economy back on track.

“The short and quick fix results that we always look for [are] what do not help,” National Organiser of the NDC Kofi Adams told Kafui Dey on Morning Starr.

“….We don’t want to go treating symptoms, we want to tackle the disease and take it out and that will take time,” adding: “This is what they [NPP] are not willing and ready [to accept].

“They want us to do what exactly they did by only doing the quick fix things and leaving the disease there to come in a more malignant form to destroy the entire body: that we will not do,” Mr Adams said Tuesday in a discussion about the Minority’s press conference concerning the state of the country.

Minority Leader, Osei Kyei Mensa Bonsu told Journalists at the press conference – which was meant to counter the President’s state of the nation address presented to Parliament two weeks earlier – that: “Kufuor inherited a regime of interest rates that were around 42%.”

“By 2008, interest rates had climbed down significantly to 25%. Today, interest rates hover around 32-33% thus significantly increasing the cost of doing business in the country.

“The Minister of Finance in his budget presentation stated that our Gross International reserves have since August 2014 recovered from 2.2months of import cover to 3.3months but the net international reserves covers less than 3weeks. The nation needs to know what the real quantum of our international reserves is.

“The reason for this demand is that in paragraph 74 of the 2014 Budget the Minister of Finance stated our reserves decreased from $5.32billion as at December 2012 to US$5.2billion as at September 2013 which provided for 2.9months of import cover. The projection then was that it would go further down subsequently. The Governor of the Bank of Ghana reported in March 2014 that the reserves decreased to US$4.88billion as at February 2014. In the circumstance, when the President through his Minister of Finance now states that the Stock Position of our Gross International Reserves as at December 2013 was US$5.6billion (par 62 of 2015 Budget) there must be a confusion of figures.

“Since 2008 the country’s fiscal deficit and current account deficit have all escalated into double digits. The public debt stock has now risen astronomically from GH¢9.5billion as at the end of 2008 to GH¢76.1billion. This figure does not include the undisbursed portion of the CDB loan. It does not include the borrowings ensuing from the IMF negotiations. It does not include the assistance from the EU which is conditional upon successful conclusion of the IMF negotiations, etc.,” the Suame MP said.

The group said: “With a debt stock of over GH¢76billion it means each Ghanaian, including the child being delivered as I speak owes GH¢3,000.00. Last year at this time when we addressed Ghanaians, we stated that the debt burden for every Ghanaian was GH¢2,200.00. Just one year on, the debt per capita has increased by 36%.

It added that: “In 2008, the debt stock of GH¢9.5billion represented 33% of GDP. Today, 6 years into the Mills-Mahama administration the debt stock has increased by over 701% that is an average increase in the stock of debt by 116.8% a year. The debt stock of GH¢76.1billion means our debt stock has escalated to 67% of GDP an increase of GH¢24.2billion in just a year. This rate of debt accumulation must be frightening to everyone else except the President and his ministers.”

“On this trajectory Ghana is on the super highway to unsustainable debt levels that pushed us to HIPC. At this rate, the international rating agencies may soon classify Ghana as a country with high risk of debt distress and thus compromise our ability to raise further financing from the international capital markets, and worse still, incapacitate the country from servicing and paying our debts.

“At the Berlin conference the President stated that Ghana is among the top five recipients of foreign direct investment in Africa. The question that we keep asking is how has that together with the colossal loans contracted over the past 6years totaling US$27billion impacted the socio-economic development of the country?”

In the view of the Minority, “the country is now at a precipice with our astronomical debt pile up and this should be extremely worrying to you [President] as it shall, before long, plunge us into the league of countries with high risk of debt distress.”

Mr Mensa Bonsu added: “Mr. President, the interest payment on the stock of debt in 2014 was 4 times Ghana’s oil revenue in that year. In 2015, the interest payment on the debt is projected to be ¢9.6billion. This figure is more than the GH¢9.5billion total debt stock in 2008. Then President Mills and Vice President John Mahama did not spare Kufuor. Today, the GH¢9.6billion represents 6 times Ghana’s oil revenue in 2015. In the 2015 budget the entire allocations to the Ministry of Roads and Highways (GH¢931.6million), Ministry of Trade and Industry (GH¢183.8million) Ministry of Fisheries & Aquaculture Development (GH¢72million), Ministry of Food and Agriculture (GH¢411.8million), Ministry of Water Resources, Works and Housing (GH¢463million), Ministry of Transport (GH¢361.6million) amount to a total of GH¢2.4 billion.

“Interest payments of GH¢9.6 billion on the GH¢76 billion debt stock in 2015 is four times what has been allocated to these six key ministries combined. For 2014, using these same six key ministries, their total budgetary allocation came to GH¢2,062 million and interest payments in 2014 was three times the total allocation to these 6 key ministries. Today, it is four times. Mr. President this is what your unchecked borrowing and debt pile up is doing to the economy. It is scorching out critical space that was available to government for real growth. Fellow Ghanaians, this is our lot,” the Minority asserted.

However, Mr Adams who appeared on the show with former Attorney General and Justice Minister in the Kufuor administration, Nii Ayikoi Otoo said President John Mahama is taking steps to fix the economy but added that adopting quick fixes will only worsen the situation.