Former Finance Minister, Seth Terkper, has warned that Ghana’s economy is fast drifting towards a Highly Indebted Poor Country (HIPC).
Ghana’s total public debt increased from Ghs122billion to Ghs291.6billion as of the end of December 2020.
The ballooning public debt stock was attributed to the current coronavirus pandemic, the banking sector cleanup exercise among others.
The fiscal impact of the coronavirus pandemic on the Ghanaian economy was Ghs19.7 billion, that of the financial sector clean-up was Ghs21billion with the cost of excess capacity charges to IPPs standing at Ghs12billion, according to the 2021 budget statement presented to Parliament on Friday, March 12, 2021.
But for these factors, the country’s public debt would have been hovering around Ghs238.9billion representing 58.7% of GDP, the Akufo-Addo administration said.
Commenting on the figures, the former Finance Minister painted a disturbingly grim picture of the Ghanaian economy under the stewardship of President Akufo-Addo. He said the administration’s economic management team needs to fasten its hold over the rising debt to avoid an unexpected economic crush.
Our debt had crossed 70% on the old basis and we became alarmed so President Mahama gave approval for the establishment of a sinking fund.”
“Debt is debt and there’s nothing like free lunch. When you defer debt instead of paying it through the sinking fund, the debt is still debt,” Terkper told Accra-based Starr FM.
“We shouldn’t be happy about deferral of debts because the nation could go back to HIPC. We came close to 70% and we were at risk of debt distress but now we’re debt distressed,” he added.
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