The Minister of Finance, Seth Terkper has downplayed worries over government’s continuous borrowing which economists and analysts say the country will struggle to repay.
According to figures from the Bank of Ghana (BoG), the country’s debt as at August 2014 stood at almost GHC 44 billion.
This is about a half of the country’s value of GHC 85 billion.
Ghana issued a $1 billion Eurobond on Thursday while the Ghana Cocoa Board (COCOBOD) in its latest syndicated loan accepted $1.7 billion from partner banks to purchase cocoa beans for the 2014/2015 cocoa season.
[contextly_sidebar id=”7NK9644JyiGehBOm6fURB0DfphcMyOBY”]The World Bank’s Africa Pulse Report ranked Ghana as the fourth country in Africa with the highest public debt in relation the total value of the economy.
Responding to questions on the Citi Breakfast Show about the rising debt stock and the implications for the country in the future, Seth Terkper said the economy has faced a lot of challenges hence, the need for the borrowing.
“Yes, debt is always a concern, it’s a concern for households, it’s a concern for businesses and it must be a concern for government…We’re moving to project basis for our loans,” he said.
Mr. Terkper added that, “It is when you put the repayment of debts on the taxpayer that you struggle to repay.”
Former governor of the BoG, Dr. Mahamadu Bawumia has challenged the government’s borrowing strategy saying, “you cannot borrow yourself out of bankruptcy.”
Mr. Terkper in the interview said previously, state-owned enterprises on government projects take government loan and not make any effort to repay, but now, cabinet and Parliament have firmly decided that “government should take the money coming from the projects up fronts, that is the escrow in the repayment of the loan.”
“When the state borrows for a project, the state-owned enterprise which is utilizing the facility or the project should be made to contribute to the repayment of the loan that has been invested. This is a policy that has been adopted.”
In 2001, Ghana entered the league of Heavily Indebted Poor Countries (HIPC) under the International Monetary Fund (IMF) which of provided debt relief and low-interest loans to cancel or reduce external debt repayments to sustainable levels.
At the time, President John Agyekum Kufour explained that “We did not take the decision to join HIPC as a political trick or gimmick but as an opportunity to take a breather to pursue medium to long term targets,” the President said, when heads of UN agencies in Ghana called on him.
By: Nana Boakye-Yiadom/citifmonline.com/Ghana