Finance Minister, Mr. Seth Terkper has stated that Ghana is nowhere near the conditions that took the country to HIPC in 2001.
According to him, the country’s debt stock is backed by strong infrastructural projects that have the capacity to refinance loans acquired by the government since 2012.
“In 2001 our debt was over 180 percent and it demanded an aggressive approach since the real sectors of the economy were under pressure, this time our debt is invested in social and commercial projects that can pay for themselves”, Mr. Terpker explained in a lecture at the University of Ghana Business School.
Recent reports pegged Ghana’s debt at 70 percent of Gross Domestic Products, a situation some economists have described as inching the country closer to the level of HIPC.
Contrary figures released by the Ministry of Finance indicated that the public debt stock in relation to the GDP as at July has dropped to 62 percent.
This means that the public debts have dropped to 83 billion Ghana cedis, as at July this year, from 95 billion Ghana cedis in June.
Despite the debt stock, Mr. Terkper assured that the future of Ghana’s economy is bright with the commencement of infrastructural projects such as the Ghana Gas which will ease the current power crisis; and the TEN field which is expected to produce 60mmscfd of gas early 2016.
He maintained that the country must stop subsidizing state enterprises such as the ECG and other commercial firms since it places enormous pressure on the tax payer.
He explained that government has taken pragmatic steps after it recorded huge budget overruns in 2012 to manage the debt stock and inject discipline into public expenditure and finance.
“One of the major decisions is to go for facilities with long term maturity so that by the time the projects operationalize, the state would have generated income from its activities to pay back the loan”.
He added that the economic team has decided to take capital projects off the budget since the country’s tax revenue cannot support huge capital projects such the construction of roads and the building of a gas processing plant.
“The GRA brings in about 6 billion dollars as tax revenue and this is woefully inadequate to support huge development such as the Atuabo Gas Processing Plant which cost one billion dollars”.
As part of the debt management, he mention that government has set up a sinking fund where a percentage of some oil revenues would be saved to pay for the country’s long term bonds to prevent bullet payments.
He disclosed that government is also drafting a plan to gradually wean district and municipal assemblies off central government’s support so that they can go to the capital market to raise funds.
