In response to government’s claim that it has invested massively in infrastructural projects for which reason it must be retained at the polls in December, the NPP’s running mate, Dr. Mahamud Bawumia, has asked the government to account for the huge chunk of the monies they have borrowed or collected in taxes over the years.
Speaking at a public lecture titled, ‘The State of the Ghanaian Economy – A Foundation of Concrete or Straw’, chaired by Former President John Agyekum Kufuor, Dr. Bawumia revealed that, the total cost of infrastructure from loans, grants and taxes from 2009 to date, is around 7 billion dollars, whereas government has borrowed in excess of 39 billion dollars.
“The Mahama government has touted its achievements in the last eight years in its green book in the area of its infrastructure. They’ve built roads, water projects, hospitals, schools and so on. The question however for most Ghanaians, is that if this government has increased Ghana’s debt from 9.5 billion cedis to 100.5 billion cedis so far; can they point to an equivalent value of projects? Unfortunately and sadly the answer is no. The government is attempting to hoodwink Ghanaians by claiming a massive increase in infrastructure investments. First, if you sum the total cost of infrastructure expenditure undertaken by this government from loans, grants and taxes from 2009 to date, it is less than 7 billion dollars. Meanwhile the government has borrowed the equivalent of some 39 billion dollars. So where is the rest of the money?”
According to Dr. Bawumia, a large chunk of the money has been wasted through over-bloating of project cost and other corrupt practices.
“Indeed, according to the Managing Director of the IMF Christine Lagarde, most of Ghana’s borrowing has been used for consumption and not for investment. The overpricing of contracts, corruption and the absence of value for money considerations are partly responsible for this. I saw two identical teachers’ bungalows at the Dambai Teacher Training College this year. One constructed under the NPP in 2007, and the other under the NDC in 2011. The one constructed by the NPP cost 195,000 Ghana Cedis, and the one by the NDC cost 900, 000 cedis. It’s the same building, the same design and specification on the same land. So what accounts for this huge difference? Another example is the runway rehabilitation at the Kumasi Airport which cost 23.8 million dollars; whereas the proposed new Airport with runway and buildings and everything is going to cost $225 million dollars. It is on record that Ethiopia is building its Shire Airport at the cost of 21 million dollars.”
Ghana’s debt to reach $42b by December 2016 – Bawumia
Dr. Bawumia thus chastised government’s continuous borrowing warning that the country’s debt in dollar terms, would reach as much as $42 billion dollars by the end of December 2016.
“By the end of 2008 following the adoption and implementation of the HIPC initiative, the government’s policy framework of fiscal discipline, the country’s debt to GDP ratio, had declined from 189% in 2000, to 32% of GDP by 2008. Indeed from independence in 1957 to 2008, Ghana’s total debt was 9.5% Billion Cedis; however; in the last seven years alone under this NDC government, Ghana’s total debt has ballooned from 99.5 billion cedis to 100 billion cedis in 2015; and a 105 billion cedis by May 2016. In fact, 66% of Ghana’s debt from independence; has been accumulated under the presidency of John Mahama in just the last three and half years.”
Dr. Bawumia, who has constantly lambasted the government’s excessive borrowing explained that, “in terms of the of the dollar equivalent of the borrowed amount, this government has borrowed some 39 billion dollars in eight years.
When I mention this, they either get confused or pretend to get confused; so for the sake of clarity, I have put in this document a table that shows them clearly the dollar equivalence of all the amounts borrowed from 2009 to 2016.
In fact by December 2016, the government would have borrowed $42 billion dollars. The government would claim no doubt, that the book value of the debt is $26 billion dollars; but quite frankly that’s a weak argument. The only reason why the book value of the debt is $26 billion is because we are applying today’s exchange rate which the same government succeed in collapsing to the value of the debt; and not the exchange rate at the time the money was borrowed. With this major increase in the debt, Ghana’s debt to GDP ratio has increased from 32% in 2008, to 72% at the end of 2015.”
Finance Minister lied about Ghana’s GDP ratio – Bawumia
Dr. Bawumia accused the Finance Minister Seth Terkper of massaging debt to GDP ratio figures during his presentation of supplementary budget in July this year.
“Interestingly, in the presentation of the supplementary budget in July 2016, the Minister of Finance stated that Ghana’s debt to GDP ratio had declined from 72% in 2015 to 63%. Unfortunately and sadly this is untrue. The calculation of the debt to GDP ratio used by the Minister is just playing wrong and misleading. The government has taken the total debt stock in May 2016, and divided it by the projected GDP in December 2016, to arise at the debt to GDP ratio is 63%. This is statistical gimmickry. If you ask the Minister about how he achieved this dramatic reduction in the debt to GDP ratio in either January or May 2016, he will be unable to tell you. All that has happened is that, he has used a higher projected GDP number to do the calculation.”
Dr. Bawumia said such excessive borrowing and the subsequent mismanagement of the economy, is to blame for the increasing levels of unemployment.
Dr. Bawumia also outlined government’s failures in the management of interest rates and its impact on businesses and the banking sector, the energy sector among others.
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