Business News of Sunday, 23 July 2017
A renowned economist has revealed that, the country’s debt stock has gone up due to government borrowing to finance deficit, which is not the smart way of best.
Dr. John Gatsi, an economist and head of the Finance Department at the School of Business of the University of Cape Coast, has said Ghana’s debt-to-Gross Domestic Product (GDP) will only reduce marginally, though GDP assumes upward trajectory and the reason simply is that the country has borrowed unreasonably very high.
“We should bear in mind we have a lot of debt repayment from 2017 to 2021 when most of our recent bonds are due for payment. We do not pay debt to GDP ratio; it is only a relevant indicator. We are going to pay the debts we are accumulating with speed with actual revenue so we cannot hide. Greater portion of the borrowing within the first half of the year appears to be for consumption,” he intimated.
The economist also described the Vice President Dr. Mahamudu Bawumia’s insistence on reducing the country’s deficit to 6.5% in the Asempa budget and GDP around GHc200billion as very misleading.
According to him, there are allocations to various ministries which are yet to receive any actual disbursements.
“To say, for instance, we have reduced the deficit to 6.5% in the Asempa budget and GDP is around GHc200billion is misleading. There are allocations to various ministries and some have not received any actual disbursements,” he stated.
Dr Gatsi was commenting on the Dr Bawumia’s answers to some economic questions at the President’s encounter with press at the Flagstaff House in Accra, last week.
Dr. Gatsi noted with concern that the mentioning of GDP projection for 2017, which is around GHc203.4billion, as if it is the actual by the NPP government, is problematic.
The economist however expressed surprise at President Akufo Addo’s silence on job creation, which was the leading theme of the government 2017 Budget Statement.
“I was, however, extremely surprised when the President could not speak to job creation within six and half months of managing the economy, especially when the theme of the 2017 Budget boldly printed on the cover page is “Sowing The Seeds For Growth And Jobs.” Also when the government promised about 750,000 jobs through ‘Planting for Food and Jobs’ programme launched early this year,” he said.
The head of Finance Department further pointed out that the IMF programme, which the President stated in his encounter with press, that it will come to its end by the end of 2018 is no news because the program has already been extended from April 2018 to December 2018, but disclosed some challenges that most MMDAs are likely to face in the near future.
“The reality is that with or without the IMF programme most MMDAs are under budget and underfunded and very soon some may be incapacitated to deliver public service. It is also possible that most of our sensitive public service delivery entities, such as training colleges, hospitals, Food and Drug Authority and Standard Authority may be without cash and accumulate new debts for taking relevant supplies on credit. We must improve and diversify our revenue generation,” he stressed.
Meanwhile the Ministry of Finance has said Ghana will complete the International Monetary Fund (IMF) programme through the budget cycle of January 2018 through December 2018 as stated by the president.
In a statement issued and signed by the Finance Minister, Ken Ofori-Atta, it said the 2018 budget will therefore be the last budget under the current IMF Programme.
“After the completion of the programme at the end of the budget cycle in December 2018, government will not extend it. The President’s remarks, therefore, is not interpreted to mean the government is pulling out of the IMF programme. On the contrary, the government will continue with and complete the IMF programme through the budget cycle of January 2017 through December 2018,” it stated.