Ghana’s debt levels exceeding 80% of GDP; unbearable – John Mahama
Former President John Dramani Mahama has said Ghana’s debt has reached unsustainable levels due to reckless government spending to win the election.
“This government must accept that it is its mismanagement of the economy, its thirst for consumer spending and the desire to spend beyond our means in order to win elections that have plunged us into the current crisis, not necessarily COVID-19.
“This has led to rampant increases in the prices of goods and services. This is mainly responsible for the difficulties that Ghanaians are going through now, ”Mahama wrote on Twitter on Saturday morning.
He added: “Our debt has swelled to unsustainable levels – exceeding 80% of GDP – putting us at very high risk of default. Almost all of our tax revenue is used to service our debt and the effect has been the introduction of several new taxes ”.
In April and May 2021, Ghana’s public debt stock climbed from GH ¢ 27.8 billion to GH ¢ 332.4 billion, which was equivalent to $ 57.9 billion, or about 76.66 billion dollars. % of gross domestic product.
In March 2021, the total outstanding debt stood at GH ¢ 304.6 billion, and the significant increase in outstanding debt is due to the $ 3 billion Eurobond raised in March 2021 as well as the huge borrowing in the domestic market.
In April 2021, the stock of public debt was GH ¢ 328.0 billion. This means that GH ¢ 23.4 billion of new debt has been added to the total debt stock.
Meanwhile, the government says the economy is recovering from the strains of COVID-19.
A statement from the Ministry of Finance said on Tuesday: “In making their decision, the credit rating agencies considered Ghana’s improved growth prospects, resilient external sector performance and continued access to capital markets ( national and international) as essential factors in maintaining the rating. and outlook.
“Notably, the two rating agencies recognized the government’s efforts to ‘build back better’ through the innovative Ghana CARES (Obaatanpa) program.
“In addition, both rating agencies (Moody’s and S&P) recognize that Ghana’s economy is recovering from the effects of the pandemic faster than its peers.”
The statement added, “Therefore, we should focus more on growing and implementing Ghana’s CARES program. S&P, in particular, has maintained Ghana’s rating thanks to the growing economic outlook and relatively transparent and responsive political institutions.
“The stable outlook balances the risks associated with external fiscal and financial pressures against the country’s medium-term economic growth prospects. Understandably, both credit rating agencies have expressed some concerns about Ghana’s affordability and debt levels. The government is, however, determined to ensure debt sustainability and fiscal consolidation.
“As such, between 2019 and 2021, the government took various liability management measures to proactively reduce the external debt stock and the interest expense burden. As a result, the government repurchased and withdrawn more than 900 million dollars of Eurobonds, which considerably reduced the stock of external debt. “
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