The Ministry of Finance has described as “erroneous,” the Institute of Economic Affairs’ (IEA) projections on Ghana’s debt stock and the economy.
The IEA said Ghana’s debt had reached unsustainable levels and something urgent must be done about it.
A Senior Economist with the Institute, Dr. John Kwakye said with the excessive and unlimited borrowing and spending, Ghana risks returning to the early 1980s when the country was on a brink of financial collapse.
[contextly_sidebar id=”rqJDhAKmfxzfH2w3KHO2bBG1WpqNOcSO”]Dr Kwakye said Ghana’s debt to GDP ratio is now 67 per cent and added that the country could go back to being a Highly Indebted Poor Country(HIPC) in 2016 if the current borrowing trend is not reversed.
However responding to the IEA, a statement signed by the Minister of Finance, Seth Tekper noted that the IEA’s projections on Ghana’s debt are too “sweeping” and did not take into account some economic details.
It further noted that it “is erroneous [for the IEA] to assert that Ghana does not have fiscal rules or laws by simply pointing to gaps and ignoring the overall status quo.”
“The IEA trajectory of debt …appears to ignore the medium-term prospects for the country and, hence, did not make room for the potentially significant GDP growth,”it said.
The statement added that evidence shows clearly that the “rate of growth and base of Ghana’s GDP went up significantly between 2010 and 2012, mainly due to the rebasing of the GDP, fast growth of the services sector, increased construction activity, rebound of cocoa production, and exports of crude oil (for the first time).”
“Furthermore the analysis fails to consider the optimum impact of projects such as the Gas Processing Plant at Atuabo in the Western Region, which has the capacity to supply 120million standard cubic feet of gas per day from the Jubilee Fields to off takers for the generation 500MW of power,” the statement indicated.
“The IEA Statement also ignores various fiscal stabilizers that have become active in a few years only,” it added.
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By: Marian Efe Ansah/citifmonline.com/Ghana