Former President John Mahama says Ghana\u2019s debt has got to unsustainable level due to government\u2019s reckless expenditure to win elections.<\/p>\n\n\n\n
\u201cThis government must accept that it is their mismanagement of the economy, their thirst for consumption expenditure and the desire to spend beyond our means in order to win elections that have plunged us into the current crisis, not necessarily COVID-19.<\/p>\n\n\n\n
\u201cThis has led to rampant increments in the prices of goods and services. This is primarily responsible for the hardships Ghanaians are going through now,\u201d Mr Mahama wrote on twitter on Saturday morning.<\/p>\n\n\n\n
He added: \u201cOur debt has ballooned to unsustainable levels- topping 80% of GDP- exposing us to very high risk of debt default. Almost all of our tax revenue is used to service our debt and the effect has been the introduction of several new taxes\u201d.<\/p>\n\n\n\n
In April and May 2021, Ghana\u2019s public debt stock shot up by \u00a227.8 billion to \u00a2332.4 billion which was equivalent to $57.9 billion, about 76.66 percent of Gross Domestic Product.<\/p>\n\n\n\n
In March 2021, the total debt stock stood at \u00a2304.6 billion, and the significant increase in the debt stock is due to the $3 billion Eurobond raised in March 2021 as well as the huge borrowing on the domestic market.<\/p>\n\n\n\n
In April 2021, the public debt stock was \u00a2328.0 billion. This means \u00a223.4 billion new debt was added to the total debt stock.<\/p>\n\n\n\n
Meanwhile, government says the economy is bouncing back from the strains of COVID-19.<\/p>\n\n\n\n
A statement from the Finance Ministry on Tuesday said, \u201cIn making their decision, the credit rating agencies considered Ghana\u2019s improving growth prospects, resilient external sector performance, and continued access to the capital markets (domestic and international) as essential factors in maintaining the rating and the outlook.\u201d<\/p>\n\n\n\n
\u201cNotably, the two rating agencies recognised the efforts of the government to \u2018build back better\u2019 through the innovative Ghana CARES (Obaatanpa) programme.<\/p>\n\n\n\n
\u201cFurthermore, both credit rating agencies (Moody\u2019s and S & P) acknowledge that Ghana\u2019s economy is recovering from the effects of the pandemic faster than its peers.\u201d<\/p>\n\n\n\n
The statement added, \u201cHence, we should focus more on growth and the implementation of the Ghana CARES Programme. S & P, in particular, maintained Ghana\u2019s rating on the back of the growing economic prospects and the relatively transparent and responsive political institutions.<\/p>\n\n\n\n
\u201cThe stable outlook balances risks from fiscal and external financing pressures against the country\u2019s medium-term economic growth prospects. Understandably, both credit rating agencies raised some concerns about Ghana\u2019s debt affordability and levels. The government, however, is committed to debt sustainability and fiscal consolidation.<\/p>\n\n\n\n
\u201cAs such, between 2019 and 2021, the government has undertaken various liability management measures to proactively reduce the external debt stock and the interest expense burden. As a result, the government bought back and retired over US$900 million worth of Eurobonds which has reduced the external debt stock significantly.\u201d<\/p>\n\n\n\n
Source: Starrfm.com.gh<\/p>\n\n\n\n