Today in History: Government explains reasons behind the current debt stock

Minister of Information Kojo Oppong Nkrumah explained that Ghana's debt stock keeps increasing due to the depreciation of the cedi.

He refuted claims by the Minority in Parliament that some 80million has been added to the country's debt stock in a space of two years.

According to him, the

Read full articlecountry's financial sector will not have been able to raise such an amount in the space of two years.

Read the full story originally published on June 8,2018 by GhanaNewsAgency

The Government on Friday discounted claims by the Minority in Parliament that it had borrowed GHS80billion within a period of two and half years.

It said those assertions were borne out of mischief and lacked of understanding of how the national account was done.

Kojo Oppong Nkrumah, the Minister of Information, who addressed a news conference in Accra, to react to the Minority's allegations, said the current debt stock of GHS198 billion was a public nominal figure.

He added that all the loans secured by the Government were approved by Parliament and did not amount to GHS80 billion as being alleged.

The loans were approved by Parliament in accordance with Article 181 sections 55, 56, and 57 of the Public Financial Management Act, Act 921, of which the Minority were party to, he said.

He said the domestic financial market could not even raise GHS80 billion within a period of two years for the government considering the volatility of the financial sector.

Explaining reasons that accounted for the increase in the debt stock from GHS122billion in 2016 to the current figure of GHS198billion, Mr Oppong Nkrumah said it was due to the disbursement of old loans by the government for various projects.

Additionally, the changes in the exchange rate, bailout of the financial services sector with GHS12billion and the IMF conditionality that required government to send funds to the Bank of Ghana for balance of payment support of which five billion was used for that purpose.

He said for instance, if a year ago, a dollar was equivalent to four Ghana cedis and someone owes one billion dollars in cedi terms it would be four billion cedis and if a year down the line a dollar is exchanged for five cedis the person's debt will increase to five billion cedis due to the shore up of the dollar rate.

The Minister also denied the Minority claims that the debt to the GDP ratio had increased from 56 per cent to 58 per cent, noting that it was currently pegged at 56.8 per cent just like what the previous administration left in 2016.

More so, the new paradigm shift in public spending, which placed a cap or threshold on borrowing did not allow government to borrow up to GHS80billion within two and half years.

The Minority in Parliament at a news conference on Thursday claimed that the Akufo-Addo's Government had increased Ghana's debt stock by GHS80billion and used the money on consumption, instead of capital expenditure or infrastructural development.

The Minority Ranking Member on Finance, Mr Cassiel Ato Forson, who spoke on behalf of the Minority, said the ruling government met a debt of GHS120billion and added GHS80 billion, thus bringing the total debt burden to GHS200billion at the end of the first quarter of 2019.

The Minority's criticism stemmed from the latest report of the Monetary Policy Committee of the Bank of Ghana.