The Ranking Member on Parliament’s Finance Committee, Dr. Cassiel Ato Forson, says he is not surprised by the World Bank’s report stating that Ghana’s debt to Gross Domestic Product (GDP) would hit 104.6% by the end of 2022.
According to him, the Minority has been blowing the alarm on Ghana’s debt risk for some time now; however, all attempts to get the government to act have fallen on deaf ears.
He stated that much of Ghana’s debt to GDP had not been properly accounted for thus creating a false sense of security for those in power despite the Minority’s agitations.
He believes that the Minority’s vindication by the World Bank, hopefully, would get the government to up their game in finding a lasting solution to the fiscal issues burdening the country.
“Ghana’s debt to GDP is not properly accounted for, in the sense that we have identified what we call hidden debt. A typical example is when you use ESLA revenues for the purposes of collateral and to use it to take a loan.
“And we believe that per the nomenclature of the ESLA receivables itself its corresponding debt should be part of the public debt. The government had consistently decided to ignore us. We believe that the ESLA debt is public debt and should be captured as such.
“Same as the sinohydro, when the government for some reason decided to classify it as barter trade, now I wonder that in this modern day we still have barter trade and we’ll use it to bypass the fiscal accounting mechanism? For some strange reason government insisted.
“In fact I had said that if you are to factor in ESLA bond, Daakye bond, obviously the sinohydro and that of road fund our public debt to GDP as at 2021 was 81%. And this is not secret, I’ve debated it on the floor of Parliament, I’ve written articles to support the position of the Minority, we wrote even to IMF to get them to do what is right when Ghana was in a programme and yet the government decided to ignore us. So I’m not surprised at this report.”
The World Bank has classified Ghana as a high debt distress country as it projects the nation’s debt to Gross Domestic Product (GDP) of 104.6% by the end of 2022.
According to its October 2022 Africa Pulse Report, debt is expected to jump significantly, from 76.6% a year earlier, amid a widened government deficit, massive weakening of the cedi, and rising debt service costs.
It is also forecasting debt to GDP of 99.7% and 101.8% of GDP in 2023 and 2024, respectively. The size of Ghana’s economy is estimated at about $72 billion, whilst it is expected to spend about 70% of revenue this year to service its debt.
The report is coming at a time the Bank and the International Monetary Fund (IMF) are conducting a Debt Sustainability Analysis on the country. A country which is highly debt distressed is unable to fulfil its financial obligations and therefore debt restructuring is required.
The World Bank further stated that Ghana needs $1.5 billion in assistance from the IMF, which could help to shore up public finances and regain access to credit markets.