Despite calls by some analysts on the dangers of the growing public debt, Finance Minister Mr. Seth Terkper has assured investors and market observers that Ghana’s debt management strategy is on track and will soon reflect in the country’s budget.
According to him, the debt stock has increased at a decreasing rate, showing huge gains in how government is prudently managing the economy to impact the lives of Ghanaians.
“If you observe carefully the debt stock since the Debt Management Strategy Act was passed in 2013, the public debt level is stabilizing due to primary fiscal deficit reduction”, he said adding that the country would by 2017 reduce its debt stock by a substantial margin.
The minority group in parliament recently bemoaned Ghana’s growing debt, describing it as a path that would lead the country back to HIPC, however, Mr. Terkper in addressing journalists in Accra maintained that underneath most of the public debt is commercial projects that have the capacity to refinance themselves.
“This is part of the debt management strategy so that capital projects such as the gas facility, roads and hospitals would pay for themselves to relief the tax payer of the burden of paying for such projects’, he said.
According to figures from the Bank of Ghana, the country’s total debt stock now stands at GHc94.5 billion, representing 70.9 percent of Gross Domestic Product (GDP)
Mr. Terkper explained that government is adopting diversified means to enable state owned enterprises whose loans have been put on government budget sheet to stop in order to allow them manage and generate funds on their own.
He stated for example that government has given municipal assemblies the authority to go to the bonds market to raise funds for their projects without any government guarantee.
“That is the practice all over the world and we must begin to move in that direction if we are to stabilize our economy as middle income country and create jobs”, he said adding that there is no justification for government to continue voting huge funds for municipal assemblies when they collect revenues as Internally Generated Funds.
He added that the management team has also channeled about 150 million dollars into Ghana’s Sinking Fund as a proactive measure of redeeming maturing Eurobonds to prevent bullet payments.
