The Bank of Ghana’s report that Ghana’s debt has ballooned from Ghc112billion in 2016 to Ghc145billion in 2018, has left many worried that the New Patriotic Party government which promised during the 2016 election campaigns not to borrow, is inching Ghana into debt distress.
However, what has raised eyebrows wide is the central bank’s claim that in spite of the gargantuan leap in debt, the country’s debt to GDP ratio has also plummeted.
The Monetary Policy Committee meeting which had reported the Ghc145billion debt proportion had claimed that the new debt level not withstanding, the debt to GDP ratio has reduced from 69.8% in 2017 to 60%.
Media reports say the central bank claims that along with the debt growth, the economy had also expanded. Strangely, the rate at which the economy expanded is not provided by the Central bank.
The development has led to many questioning whether the BoG has taken to voodoo economics.
In the build up to the 2016 election, Vice President Bawumia, who was then Running mate to then candidate Nana Akufo-Addo had revealed that some times the central bank and the Statistical Service cook figures to make a sitting government look good.
Dr. Bawumia, who is now the head of the NPP’s Economic Management Team had spoken on the strength of experience as a former Deputy Governor of the Bank of Ghana.
Incidentally, the Statistical Service has also come under question marks with its recent report that inflation is now in single digit even though the cedi keeps losing value against major trading currencies, especially the US dollar.
Contextually, Ghana’s total national debt hit Ghc112.4billion in 2016, pegging the debt to GDP ratio at 67.4%. Ghana at the time was reported to be the fastest growing economy in the world.
The NPP which was then in opposition had pooh-poohed the good performance with Dr. Bawumia claiming at a point that the central bank had been cooking figures to make the NDC government look good.
Dr. Bawumia had also dismissed the government over borrowing claiming a policy of borrowing to build the country was a lazy man’s approach, before infamously declaring that his party would never borrow to run the country because the money is already available in Ghana.
However, immediately the NPP won power in December 2016 and came into power in 2017, it started borrowing, starting with the infamous KENBOND scandal in which Franklin Templeton had been exclusively given the opportunity to buy 95% of the $2.25billion bond.
By the end of 2017 the debt stock had grown to Ghc142 billion. In February 2018, it grew further to Ghc145 billion. Somehow, while the debt is growing, the debt to GDP ratio is decreasing.
It is reported that the BoG says the downward trend in the debt to GDP ratio is because the economy has expanded, but nobody knows exactly how the economy expanded. More so, the cedi keeps depreciating against all major trading currencies.
The development has led many to suspect that Dr. Bawumia was telling the truth in 2015 when he said the BoG and the Statistical Service at times intentionally cook up figures to make the government look good.
According to the BoG the external component of the debt is at 17.4 billion dollars or 76.9 billion cedis. This also represents 31.8 percent of GDP.
Meanwhile, the domestic component of the debt is at 68.2 billion cedis representing 28.2 percent of GDP.
Comparing the absolute figures, Ghana’s debt stock rose from 142.5 billion cedis as at December 2017 to the 145 billion cedis presently.
This means that between December 2017 and February 2018, Ghana added about 2.5 billion cedis to her debt.
Meanwhile, in the banking industry, total assets stood at 97.8 billion cedis as at April 2018.
In addition, total deposits reached 61.1 billion cedis with advances reaching 36.8 billion cedis in April 2018.