Dr. Bawumia mentioned the energy sector excess capacity payments and the banking sector clean-up as two other reasons why government had to resort to the IMF for bailout.
The citing of these two factors adds to the oft-cited impact of Covid-19 and the effects of the Russia-Ukraine war.
He spoke at the official launch of Accra Business School’s IT programmes on Thursday.
“In addition to COVID-19, there were two major items of expenditure that are critical to understanding the evolution of the fiscal deficit and the debt stock: the Banking Sector Clean up (GHC 25 billion) and the Energy Sector Excess Capacity payments (GHC 17 billion).
The excess capacity payments of GHC 17 billion relate to a legacy of take or pay contracts that saddled our economy with annual excess capacity charges of close to $1 billion,” he said.
“It should be noted that without the GHC54.0 billion debt for the three exceptional items (COVID-19, Financial Sector and Energy), Ghana’s debt to GDP would be within the sustainability threshold of some 68% instead of the 76.6% at the end of 2021,” the Vice President explained.
He emphasised that, “If you take out the fiscal impact of this quadruple whammy, Ghana will not be going to the IMF for support because our fiscal, debt and balance of payments outlook would be sustainable.”
