GHANA’S DEBT HAS CROSSED HIPC PROPORTIONS
Distinguished friends from the media, the National Democratic Congress (NDC), has taken notice of frantic efforts by the Akufo Addo-government, to conceal Ghana’s current catastrophic debt position and wishes to set the records straight.
First and foremost, we wish to reiterate the assertion by our flag-bearer, H.E John Dramani Mahama, that President Akufo Addo has supervised the degeneration of Ghana’s economy back to the same unsustainable debt position we were when we joined the HIPC program nineteen (19) years ago.
You may recall, that in the run up to the 2016 general elections, the New Patriotic Party (NPP), led by its over-hyped economic messiah, Dr. Alhaji Mahamudu Bawumia and then Candidate Akufo Addo, berated the NDC for what they described as excessive borrowing by the Mahama government. The NPP led by Dr. Bawumia, described Ghana’s debt position at the time, as unsustainable and went on to describe the country as a “Highly Indebted Lower Middle Income Country (HIMIC)”. This was contained in a facebook post by Dr. Bawumia on 24th March, 2015.
Ladies and gentlemen, it was against this backdrop, that the NPP promised at page 13 of their 2016 manifesto, to reduce government borrowing and improve our debt sustainability position when elected. Note that, the promise was not to reduce the rate of borrowing as the NPP is deceitfully claiming today, but rather, to reduce government borrowing. And it was on the basis of this and many other lofty promises, that Ghanaians voted Akufo Addo and the NPP into office.
It is worthy of note, that at the time the NPP made this promise in the year 2016, our public debt stood at GHS120 billion and our debt to GDP ratio at 55.6% (rebased economic data). But what do we see today? Our Public debt which stood at GHS120 billion as at December 2016, has ballooned to GHS258.8 billion, (i.e as at June 2020). Also, our debt to GDP ratio which stood at 55.6% as at December 2016, has increased to 68.3% and projected by the IMF to hit 76.7% by December this year.
What this means is that, President Akufo Addo has added more debt, i.e. a whopping GHS138 billion and still counting, to Ghana’s Public debt in only three (3) and half years, far more than any government has done in the history of this country, and far more than all successive governments since independence, have cumulatively added to the country’s Public debt. In fact, per our current total Public debt of GHS258.8 billion (i.e. as at June 2020), every Ghanaian in Ghana today is indebted to the tune of about GHS10,000.
There is no gainsaying the fact that our current debt position (i.e debt to GDP ratio of 76.7%), is highly unsustainable and exceeds the acceptable debt threshold. Indeed, our current debt position, is worse than where we were when we joined the HIPC debt relief program in the year 2001, at which time our debt to GDP ratio stood at 61%. As a matter of fact, our debt position this year, is the worst ever in history of our 4th republican democracy.
This has resulted in a situation where over 90% of our domestic revenue is spent on debt servicing. Per the 2020 mid-year budget review statement, domestic revenue from January 2020 to June 2020, stood at GHS21,682,896,236. Of this amount, GHS19,599,639,701, representing 90.4% of domestic revenue, was used for debt servicing alone within this period. What this shows is that, our ever-rising Public debt and its attendant high debt servicing amount (interest payments and amortization), has so deteriorated the country’s fiscal space, such that today, after we service our debts, very little revenue is left and government has to borrow for Compensation, Goods & Services and Capital Expenditure (CAPEX).
So bad is our current debt position that our finance minister, Ken Ofori Atta, at the virtual plenary session of the Development Committee (DC) of the World Bank (WB) and International Monetary Fund (IMF) last Friday, pleaded for debt forgiveness for the country. See https://www.graphic.com.gh/business/business-news/forgive-our-debts-ofori-atta-pleads-for-vulnerable-countries.html.
As, I indicated earlier, Ghana’s current debt position is highly unsustainable and the worst in the history of our 4th republican democracy. This is a monumental failure on the part of President Akufo Addo and the NPP to keep their 2016 electoral promise to the Ghanaian people that they will reduce government borrowing and improve our debt position. Akufo Addo’s failure to keep this promise, is monumental betrayal of the trust of Ghanaians, for which he must be kicked out from office.
Ladies and gentlemen, you can see from the foregoing facts, that our flag-bearer, H.E John Dramani Mahama, was very charitable to the Akufo Addo-government when he asserted that, Ghana is back to the HIPC days. This is because, even though the IMF’s HIPC debt relief program has ended, and Ghana is now a lower middle income country, our 2020 debt to GDP ratio of 76.7%, is highly unsustainable and worse than where we were 19 years ago when we joined the HIPC program. This is an indisputable fact, and no amount of deceptive semantics by the Akufo Addo-government can change that.
The question Dr. Bawumia and President Akufo Addo must answer is that, if they described Ghana as a “Highly Indebted Lower Middle Income Country (HIMIC)” in March 2015, when our debt to GDP was just about 55%, then how will they describe Ghana now that our debt to GDP ratio is 76.7%?
Distinguished friends from the media, it is important to make the point, that the attempt by the failed Akufo Addo-government to blame our ever-worsening debt position on COVID-19 is untenable and laughable to say the least. This is because, our Public debt was already increasing at an alarming rate and had reached unsustainable levels, with a debt to GDP ratio of 63%, even before we were hit by the coronavirus pandemic in March 2020. Therefore, the claim by government spokespersons that COVID-19 is what has accounted for our current unsustainable and catastrophic debt situation, is not borne out by the facts.
What is even sad and bizarre about the unsustainable and catastrophic debt situation President Akufo Addo has plunged Ghana, is that this government cannot show any significant or self-financing projects that their unprecedented borrowings have been used for. Unlike President Mahama who can point to many tangible, significant and in some cases, self-financing projects that he undertook with the about GHS70 billion he added to the Public debt during his tenure in office, President Akufo Addo cannot boast of any significant or self-financing projects he has undertaken with the over GHS138 billion he has added to the country’s Public debt in the last three (3) and half years.
For instance, whereas, President Mahama can boast of dozens of hospitals and health facilities such as the Greater Accra Regional Hospital (The Ridge Hospital), The University of Ghana Medical Center, The Ga East Municipal Hospital, The Upper West Regional Hospital, The rehabilitation of the Upper East Regional Hospital, among others, President Akufo Addo cannot boast of a single hospital he has built for Ghanaians since he took office. Also, whereas President Mahama can boast of commencing the construction of 123 new Community Day Senior High Schools (E-Blocks), 46 of which he fully completed, President Akufo Addo cannot boast of a single secondary school he has built since 2017, despite his unprecedented borrowings. Worse if it all, is that President Akufo has abandoned most of the infrastructural projects he inherited from the erstwhile Mahama government to rot.
Ladies and gentlemen, the reason why President Akufo Addo has very little show for the unprecedented resource envelope that has accrued to his government is that, he has wasted the chunk of the monies on consumption, corruption and wasteful expenditures. His misplaced priorities is what has plunged Ghana into the catastrophic debt situation and economic quagmire we presently find ourselves.
As a result of his unbridled penchant for borrowing, President Akufo Addo has encumbered most of the country’s revenue streams by mortgaging our bauxite deposits to Sinohydro, and the GETFUND and ESLA for loans which he has wasted on consumption-related expenditures, rather than investments in meaningful projects. This will deprive future governments and generations who will have the burden of paying for these wasted borrowing of revenue for development.
Friends from the media, after all the mouthwatering promises of the NPP and their boastful claims that they are better managers of the economy, all available economic indicators show, that President Akufo Addo has supervised the worst mismanagement of Ghana’s economy since independence. It have become evident, that all the talk about being better managers of the economy, were all lies calculated for votes and nothing more.
Despite promising to reduce government borrowing, President Akufo Addo has borrowed more than any government in Ghana’s history, with very little to show. Today, our current debt position is unsustainable and the worst ever in our 4th republican history. Also, despite promising double-digit economic growth annually at page 13 of his 2016 manifesto, overall economic growth rate, which stood at 3.4% as at December 2016, despite the drop in commodity prices on the international market and a huge drop in Oil production, is projected to drop to 0.9%- the lowest in the country’s fourth republican history. Again, despite promising to maintain fiscal discipline, Ghana’s Fiscal deficit has galloped and is projected to hit 16.4% by December 2020, with COVID-19 accounting for only 2.5%. This will be the worst fiscal deficit Ghana has ever recorded since independence.
In short, President Akufo Addo has flattered to deceive on his promise to manage the economy well and transform Ghana in 18 months. Today, the economy is crumbling and Ghana is back to the HIPC days. Times are extremely tough and Ghanaians are suffering; all as a result of the poor leadership and legendary economic mismanagement of President Akufo Addo and his corrupt government.
THE NPP’S PERENNIAL LIES ABOUT INHERITING AN ECONOMIC MESS.
Ladies and gentlemen, the NPP has persistently lied to the people of Ghana and the world that they inherited an economic crisis from the NDC/Mahama government in 2017. So let me use this opportunity, to set the records straight once and for all.
- The Akufo Addo-government inherited the innovative Ghana Infrastructure Investment Fund (GIIF) which had US$270 million in it- a fund set up to help leverage global financing to accelerate infrastructure development in the country. Yet to the NPP lies that they inherited an economic mess.
- The NDC bequeathed to the Akufo Addo-government, a sinking fund of US$300 million for the amortization of the $US750 million Eurobond the Kuffour government issued in 2007. Yet, the NPP lies that they inherited an economic mess.
- The Mahama government bequeathed to the Akufo Addo-government, a Stabilization Fund which had US$207 million, which is what they had to fall on for survival when we were hit by COVID-19 in March this year. Yet the NPP lies that they inherited an economic mess.
- The Akufo Addo-government, inherited two additional massive oil fields (TEN-SANKOFA fields) from the Mahama government- fields that today have taken oil production from about 80,000 barrels per day in 2016, to nearly 200,000 barrels per day- which accounts for the bulk of the economic growth Ghana recorded in the year 2017 and 2018. Yet, the NPP lies that they inherited an economic mess.
- The NDC handed over to the Akufo Addo-government, Gross International Reserves (GIR) of US$6.2 billion. Note that, the NDC in 2009, met three times less than what we left for the NPP in terms of Gross International Reserves. Yet the NPP lies that they met an economic crisis.
- The Akufo Addo-government inherited a Balance of Payment surplus from the Mahama government in 2017. In 2009, the NDC inherited both a Budget deficit and a Balance of payment deficit. Yet, the NPP lies that they inherited an economic crisis.
- The NDC handed over to the Akufo Addo government, a nation where Dumsor was already a thing of the past. This long-standing and hydra-headed problem that had bedevilled Ghana for decades, was finally conquered by the visionary Nation Builder, John Dramani Mahama. A great leader does not waste time complaining about challenges. He fixes it and that is what John Mahama did for this country. Yet the NPP lies that they inherited an economic mess.
- The NDC handed over to the Akufo Addo-government, the Ghana Eximbank- a far reaching initiative to accelerate our vision of making Ghana an export competitive economy. The same Ghana EXIMBANK, the NPP is using to finance its much-touted 1D1F program. Yet, the NPP lies that they inherited an economic mess from the Mahama government.
In the area of Energy, apart from solving Dumsor;
- The NDC set up and bequeathed to the Akufo Addo-government the ESLA Fund to deal with legacy debts that had bedevilled the energy sector for decades- this fund has yielded averagely GHS3 billion yearly, since the NPP took office in 2017. Yet, the NPP has persistently lied that they inherited an economic mess.
- The Akufo Addo-government inherited the game changing Atuabo gas project- which today saves Ghana some 300 million dollars a year- monies that would have been used to procure Crude oil to power our power plants. Yet, the NPP says it met a mess.
- The Akufo Addo-government inherited annual cocoa output of 969,000 MT from the Mahama government. Yet they claim to have inherited an economic mess.
- The Akufo Addo-government, met a financial services sector that had grown by 8.1% in 2016, far higher than the 1.7% growth they recorded for the sector in 2019; A manufacturing sector that saw 7.9% growth in 2016; higher than the 6.3% growth recorded they in 2019. A construction sector that had grown by 8.4% in 2016-far higher than the -4.4% growth they recorded for the sector in 2019. Yet, they continue to lie that they inherited an economic mess.
Ladies and gentlemen, the above indisputable facts show that President Akufo Addo is the luckiest and most-resourced President in Ghana’s history having had access to an unprecedented resource envelope of over GHS370 billion in the last three and half years. Yet, President Akufo Addo will on 7th January, 2021 be handing over to the NDC, the worst debt to GDP ratio of 76.7% that has taken Ghana back to the HIPC days, an abysmal economic growth of 0.9% and a staggering 16.4% fiscal deficit; at a time when so many african countries are seeing far superior growth and far lower deficits.
How a group with this shambolic performance can have the moral authority to even talk of inheriting an economic crisis, remains a thing of wonder.
Ladies and gentlemen, the real crisis NPP faced when it came to power is not an economic crisis. It is a credibility crisis. It is an integrity crisis. A trust crisis. They are too dishonest to acknowledge this massive economic legacy the Mahama administration handed over to them and too incompetent that they have mismanaged and totally destroyed the economy we bequeathed to them.
This is why, we in the NDC, are appealing to the good people of Ghana to kick out the incompetent and failed NPP/Akufo Addo-government on 7th December, 2020 and Vote for the Nation Builder, John Mahama, to recuse this country and restore us back to the path of growth, development and true progress. Vote John Mahama for jobs and Prosperity for All.
SAMMY GYAMFI Esq.
(National Communications Officer)