The National Democratic Congress (NDC) Government has increased the country’s debt stock to GH¢101 billion as at the end of August, 2016 (within the last seven-and-a-half years).
When the New Patriotic Party (NPP) was leaving office, the country’s debt stock was GH¢9.5 billion which has suddenly jumped to GHC101 billion.
Worsening Plight
In spite of the massive borrowing by the current Mahama administration, the lives of most Ghanaians are nothing to write home about, but government continues to make a jest of the people by trumpeting on several platforms that it has transformed their lives.
Government has also created the impression that a lot of the funds it has borrowed have been channeled into infrastructural development.
The total public sector debt stock stood at GH¢108.6 billion at the end of July but increased to GH¢101, representing 65.9 percent of Gross Domestic Product (GDP).
Out of the total debt stock, debt incurred internally was GH¢49.2 billion, representing 29.5 percent of GDP, while the external debt stock stood at GH¢60.6 billion, representing 36.4 percent of GDP.
NPP’s Analysis
Recently, the vice presidential candidate of the New Patriotic Party (NPP), Dr Mahamadu Bawumia, at a lecture at the National Theatre in Accra, said, “By the end of 2008, following the adoption and implementation of the HIPC initiative and the NPP government’s policy framework of fiscal discipline, the country’s debt to GDP ratio had declined from 189 percent in 2000 to 32 percent of GDP. Indeed, from independence in 1957 to 2008, Ghana’s total debt amounted to GH¢9.5 billion.”
He said in the last seven years alone, Ghana’s total debt ballooned from GH¢9.5 billion to GH¢100 billion by the end of 2015 and GH¢105 billion in May 2016.
“Some 66 percent of Ghana’s debt, i.e. GH¢69 billion of it, has been accumulated under the presidency of John Dramani Mahama in just the last three-and-a-half years!
“In terms of the dollar equivalent of the money borrowed, this government has borrowed some $39 billion in eight years. When I mention this, they either get confused or pretend to get confused…By December 2016 the amount will be at least $42 billion.”
Stifling Businesses
Dr Bawumia stated that with such large-scale borrowing, government was crowding out the private sector which is unable to borrow to grow their business. Risk-free Treasury bill rates are around 23 percent (up from 10.6 percent in 2011) and bank lending rates are on the rise because of excessive government borrowing. Lending rates of financial institutions are now as high as 40 percent.
“This development means it has become virtually impossible for businesses to borrow in the financial sector to grow and produce more. Government has today become the biggest competitor to private business and by its actions squeezing the little life left in them,” Dr Bawumia observed.
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