Every Ghanaian now owes GhC7,836.00 – Ato Forson writes

Ato Forson is a former deputy finance minister

I have been looking at the Summary of Economic and Financial Data for May 2020 as put out by the Bank of Ghana.

It is intriguing to observe that Ghana’s total debt stock as of March 2020 stands at GhC236.1 billion.

The data further reveals that Ghana’s debt increased from GhC120.3 billion in December 2016 to GhC236.1 billion by 31st March 2020.

Despite his vociferous public debt politics in opposition, President Akufo-Addo has added some GhC116 billion to our public debt in just 3 years and a few months. Indeed we have to #KickNanaOut

Analysed closely, President Akufo-Addo’s debt accumulation is almost akin to Ghana’s entire public debt since independence.

It is even more troubling to note that if the public debt is shared among all Ghanaians, each of us owes a whopping GhC7,836.00.

There are other observations I must proceed to highlight:

First, it is wrong for the Bank of Ghana to express the actual public debt as at 31st March 2020 as a percentage of the projected GDP for end of the year, that is December 2020 which creates an obvious erroneous impression.

Secondly, BoG is using December 2020 projected nominal GDP of GhC398,048 billion instead of the official projected nominal GDP of GhC385,251 billion which the government shared with the IMF in April 2020.

In effect, the Bank of Ghana is deliberately using a higher Nominal GDP to create the false impression that government’s nominal debt as percentage of GDP is low. This is intellectual dishonesty and dangerous not only to Ghanaians but to the investor community.

This is dubious, a systematic and deliberate manipulation of data which as we know has recently been exposed by the IMF. This is not only shameful but goes a long way to damage the otherwise reputable image of the BoG.

Bank of Ghana should be reminded that it is not a political institution but an important technical and professional institution of State whose reputation is very crucial to Ghana’s economic progress.

COVID-19 has caused us enormous affliction, the last thing anyone wants in this period is additional troubles from a central bank whose data cannot be trusted.

I therefore call on the BoG to as a matter of urgency come clean and rectify what is now an exposed plot to deceive Ghanaians and the investor community.

Thirdly, I wish to draw the attention of the Governor and the Minister of Finance to Section 30 of the Bank of Ghana Act, 2002 (Act 612) as amended by the Bank of Ghana (Amendment) Act, 2016 (Act 918) regarding the breach of the ceiling for central bank financing that has occurred.

The 2019 Domestic Revenue was GhC51,988.01m and 5 percent of this is about GhC2,599.40m

Regrettably, the Bank of Ghana has already disbursed GhC5.5B to finance Government of Ghana’s operations without recourse to the laws of Ghana: can you imagine!!!

In clear terms, the Bank of Ghana has printed GhC5.5b to finance GoG’s operations and is planning to print even more.

This is a flagrant breach of the Bank of Ghana Act. The Minority in Parliament therefore cautions the Governor of the Bank of Ghana, that there are consequences to his actions.

In any case, why has the Bank of Ghana become an extension of the Ministry of Finance?

Instead of government embarking on aggressive fiscal austerity measures such as pruning down the size of government and cutting down the number of government appointees to make savings, government is rather stampeding the resources of the Bank of Ghana at will.

It is time to end the financial recklessness and give way to prudent and credible management of the economy to avoid this #TotalFailure

Source: BoG’s Summary of Economic and Financial Data

Cassiel Ato Forson
Ranking Member
Finance Committee of Parliament.