The former rector of the Ghana Institute of Management and Public Administration (GIMPA) Prof Stephen Adei has said Ghana is going through its worst economic and financial crisis in decades due to “excessive borrowing” by the government.
Delivering the state of the nation address, President Nana Akufo-Addo mounted a strong defence for the government’s continuous borrowing in the wake of an economy battered by COVID-19 and Putin’s war,, insisting that his government has not been reckless in spending.
“We have not been reckless in borrowing and spending. It is worth noting that the debts we are servicing were not only contracted during the period of this administration.
“Considering the amount of work that still needs to be done on the state of our roads, the bridges that have to be built, considering the number of classrooms that need to be built, the furniture and equipment needed at all stages of education… I dare say no one can suggest we have over-borrowed or spent recklessly,” Akufo-Addo said.
Ghana is trying to restructure most of its public debt, estimated at GHC576 billion (US$45 billion) at the end of November. Local bondholders have been asked to voluntarily exchange GHC130 billion of debt for new bonds that will pay between 8.35% and 15% interest, compared with an average of 19% on old bonds.
Speaking on the sidelines of the Signature Market Pre-launch campaign at the Kwame Nkrumah University of Science and Technology in Kumasi, Prof Adei said the fundamental mistake the government made was to have borrowed beyond its capacity.
Accept responsibility
According to him, the government must accept responsibility and work to change the fortunes of Ghana.
“I think the biggest mistake they [the government] made is that they borrowed beyond our capacity to service it,” Adei, the former board chairman of the Ghana Revenue Authority (GRA), said.
“If you are a country and you borrow beyond your capacity, you will be in trouble, of course, COVID-19 came in, and the Russia-Ukraine [war, too].
“But the reason why things got worse is because of these underlying mistakes they made and they must admit it. If not they won’t be going to the IMF,” Adei added.
“We have to learn and not repeat our mistakes by going on a borrowing spree”, he urged the government adding: “the leakages should be reduced, the level of corruption, the wastage from the government after government is high, so, we don’t get value for money”.
