The Ministry of Finance has described as factually inaccurate a report recently published by the Overseas Development Institute (ODI) on “Sub-Saharan Africa International Sovereign Bonds”.
The report assesses the risks associated with the use of international sovereign debt by sub-Saharan African countries.
According to the Ministry of Finance the report contains factual inaccuracies and in particular the claim that irresponsible use of funds by some countries was contributing to the problem, with Ghana frittering away money on public sector wage increases.
A press statement signed by a Deputy minister of Finance Mona Helen K. Quartey said government of Ghana has a strict policy of not using borrowed funds for recurrent expenditure.
[contextly_sidebar id=”CFsmJEUmZb4t9NzloaUclmlVsAdo64zO”]Therefore the claim that international sovereign borrowings were used to cover public sector wages is inaccurate.
‘Indeed, Ghana is capable of using its domestic revenues to meet its wage payments. To illustrate the point, Tax Revenue amounted to about GH₵19.0 billion in 2014, whilst the wage bill was about GH₵9.4 billion in the same year, even with the recent difficulty in implementing the wage policy called Single Spine Pay Policy’.
It adds that public sector wage adjustments initiated in 2010 were one-time rationalizations designed to correct inequities in the public sector wage structure. The needed corrections have been made.
‘Public sector wages are trending down, falling from 57.6% of government revenues in 2013 to 49.3% in 2014 and all other things being equal, expected to decrease further to 40.5% in 2015.
The 73.7% that is widely quoted is actually the ratio of compensation payments to tax revenues in 2013 including arrears.
This ratio narrowed to 61.4% in 2014 and is expected to decrease further to 50% in 2015’. The statement said.
It adds that Ghana is fully capable of meeting its international debt service obligations and has done so consistently since 2007.
‘Like all international bond issues, each Government of Ghana International Bond issue is approved by Parliament and is backed by a Prospectus in which full disclosure of the use of bond proceeds is made. It is the consistency and credibility of such declarations that have enabled Ghana to successfully complete three bond issues in international markets since 2007.
Ghana is fully capable of meeting its international debt service obligations and has done so consistently since 2007’.
By: Vivian Kai Mensah/citifmonline.com/Ghana