Ghana’s fiscal deficit has hit a high of 13.7 percent of Gross Domestic Product (GDP) and its public debt has hit GHC 291.6billion from GHC 122billion in 2019, according to the Budget Statement for 2021.
This extremely hopeless data was presented by the Minister of Parliamentary Affairs and leader of government business, Osei Kyei-Mensah-Bonsu.
The public debt means that Ghana’s debt-to-GDP has hit approximately 80%. This is perhaps the highest in Ghana’s recent history and also far above the 70% threshold economies must not cross so as not to be categorised asd operating a highly indebted and unsustainable debt portfolio.
According to Mensah-Bonsu, the public debt included the cost of the financial sector clean-up, the majority leader added.
Whatever the explanation, the debt levels essentially mean that the Akufo Addo administration has racked up more public debt than all governments put together since independence.
Even though Mr. Kyei-Mensah-Bonsu is assuring the Ghanaians populace that there is no cause for alarm, Critics are not too sure why they should not be alarmed.
“Mr. Speaker, today Ghana is better positioned to recover and rebuild an even more resilient economy. Nobody says we know how to do it but also because the grace of God has been assured for this journey,” Mensah-Bonsu stated.
Former Finance Minister Seth Terkper noted that the current debt-to-GDP ratio is “more than” what the central bank quoted as of November 2020 at 74.5 percent.
“Download the Bank of Ghana MPC report and you’ll see in the details that that was the debt at the end of November, so, if you add December, which is approximately GHS12 to GHS15 billion borrowing every month, that takes you straight to about 80 percent, which is what Moody’s and the Minority have been saying is the debt level,” Terkper noted in an interview monitored by Whatsup News.
According to him, the only option left for the government to generate needed funds to finance its projects is to squeeze Ghanaians even more in taxes, both direct and hidden.
“So, with this, the debt option is very difficult because we are already planning to borrow to finance existing debt. The deficit is already high and, so, if you cannot control some expenditure, then I’m afraid it looks like the option is to increase taxes”, he suggested.
