Ghana’s Government says the country’s debt to GDP ratio of 49.5 percent has not spiraled out of “manageable limits”.
Information and Media Relations Minister Mahama Ayariga posted on his facebook wall that the debt to GDP ratio could only be deemed to have gone bonkers if hits the “60% mark which is the international benchmark for developing countries”.
According to him, “it is at this point that concerns can be raised about its sustainability”.
The Government also says the current debt to GDP ratio “remains lower than the 52% debt to GDP ratio inherited in 2009” by the Mills Administration from the Kufuor government.
The West African country’s current debt stock is 43.9 percent.
It prompted a warning by the World Bank for the country to be wary of its borrowing and management of the economy.
The multi-donor agencies have also withheld disbursement of about US$188 budgetary support to the country because they have concerns about Ghana’s spiraling wage bill of 74 percent of national revenue.
The wage bill soared after the workers were migrated onto the single spine salary structure.
The donors also have concerns about the toll that the country’s energy crisis had on its economy as well as the effects of the high budget deficit of 12 percent.
The situation, recently caused Economist Dr. Robert Osei of the Institute of Statistical, Social and Economic Research (ISSER) of the University of Ghana, to warn that Ghana could soon sink into a highly indebted poor country status if the downward trend of the economy worsens.
Editor-in-Chief of the New Crusading Guide Newspaper, Kweku Baako Jr. also described the economy as being in “tatters”.
He is good company with the Executive Director of the Danquah Institute, Mr. Gabby Asare Otchere-Darko, who said the government appears to be borrowing ceaselessly to service other loans thus plunging the country into the abyss.
Finance Minister Seth Terkper, however, recently, allayed fears that the economy is grinding to a halt as underscored by Mr. Ayariga.
For comparative analysis, Mr. Ayariga published the debt to GDP ratios of the seven most industrialised nations in the world, as published by the International Monetary Fund, to argue that: “…Merely looking at a country’s debt in relation to its GDP and concluding that its economy is on the verge of collapse could be misleading”.
Government Debt as a percentage of GDP (G7)
Country Net Gross
US 87.859% 106.525%
Britain 82.785% 90.314%
Japan 134.325% 237.918%
Italy 103.206% 126.978%
Germany 57.224% 81.964%
France 84.065% 90.291%
Canada 34.563% 85.641%
Mr. Ayariga also said: “It is important to examine what has been done with the money borrowed and its impact on the growth of the economy”.
He dismissed as “completely false”, claims that the monies borrowed have not been used for development purposes.
According to him, “Thousands of projects have been undertaken over the last few years (Refer to Green book 2 for schools under trees, hospitals, energy sector projects, CHPS compounds etc.)”.
“In the road sector alone, several projects have either been completed of ongoing”, he explained and provided the following list of projects to buttress his point.
SOME ROAD PROJECTS UNDER NDC GOVERNMENT
1. Agbozume-Aflao (19.85Km)
2. Fufulso-Sawla Road (lot 1 + lot 2)(295Km)
3. Assin Praso-Asante Bekwai (60Km)
4. Agona-Junction-Elubo (30Km)
5. Asankragwa-Enchi Road (53Km)
6. Awoshie-Pokuase Road and Community upgrading project includes 14 schools, a modern lorry park and a market at Anyaa.
7. Kwame Nkrumah Interchange to start very soon (74.8m Euros)
8. Cocoa Roads-A total of 600Km under construction with 438.64 completed
9. Giffard Road
10. Burma Camp Road (Phase 1 and 2)
1. Ghana Dutch Bridges project-94 bridges under construction (78 completed)
2. Ghana-ACROW Bridges project-100 bridges under construction (43 completed)
3. Ghana Spanish Bridge Project- 52 Bridges under Construction