Bawumia: Interest on Ghana's debt six times oil revenue

Ghana is paying six times its total oil revenue as interest on the country’s total public debt stock; that’s the computation done by former Deputy Governor of the Bank of Ghana, Dr Mahamudu Bawumia.

“We’ll reach GHC99billion by the end of this year,” the Running Mate to the Flagbearer of the biggest opposition Party said in a post-budget presentation interview with Richard Sky of Citi FM.

“The interest on this debt alone is going to be six times Ghana’s oil revenue,” Dr Bawumia said.

“When we found oil, we were happy that we found oil, but the borrowing of this Government has compromised the whole oil discovery; you need six times our oil revenue just to pay interest on the debt, not even capital, so, it is a really sad development,” he complained.

The Government of Ghana, according to the 2016 budget and fiscal statement presented to Parliament Friday by Finance Minister Seth Terkper, realised a total of US$341.50 million from the oil and gas sector as of the third-quarter of 2015.

“Total petroleum receipts (i.e. proceeds from Jubilee liftings and other petroleum receipts) as at the end of the third-quarter of 2015 was US$341.50 million (GH?1,243.65 million),” Mr Terkper read to the House.

He said the Ghana National Petroleum Corporation (GNPC) lifted five parcels of crude oil (i.e. the 25th–29th liftings) on behalf of the State between January and September 2015.

“This involved 4,781,972 barrels of oil, down from 4,824,715 barrels in the corresponding period in 2014,” he said.

Out of the total petroleum revenue of US$341.50 million received in the first nine months of 2015, US$98.30 million was allocated to GNPC (the NOC) as its share of Equity Financing Cost (US$38.66 million) and Net Carried and Participating Interest (US$59.64 million).

A total of US$16.60 million (GH?67.06 million) was transferred into the GPF, of which US$4.98 million or GH?20.17 million was transferred to the GHF while US$11.62 million or GH?46.89 million was transferred to the GSF.

And a total ABFA amounted to US$227.47 million (GHS834.76 million) between January and September 2015, of which US$39.81 million was transferred to the Ghana Infrastructure Investment Fund (GIIF). Meanwhile Ghana’s public debt stock, according to Mr Terkper, is now “increasing at a slower pace.”

The slow-down, he said, can be put down to prudent fiscal measures being implemented by the Government.

Currently, Ghana’s total debt stock is about GHC92.2 billion, he told the House. It increased by GHC5 billion between May and June 2015. As of September this year, figures from the Bank of Ghana’s economic and financial data showed the total debt stock stood at GHc94.5 billion, representing 70.9% of Gross Domestic Product (GDP).

After its first review of Ghana’s implementation of a three-year bailout programme, the International Monetary Fund (IMF) said the country’s performance under the Extended Credit Facility programme exceeded pre-HIPC levels.

Per the trend of the growing debt stock, the Bretton Wood institution, projected that Ghana will end 2015 with a 75% debt-to-GDP ratio.

Ghana’s total public debt in the first-half of the year has increased consistently by about GHc15.1 billion, growing from GHc79.4 billion in January, to GHc94.5 billion in June.

Recently, the flagbearer of the main opposition New Patriotic Party (NPP), Nana Akufo-Addo said Ghana’s total debt stock will hit GHS110 billion by the time President John Mahama leaves office, a situation he believes amounts to mortgaging the country’s future.

“The indebtedness of Ghana has gone from GHC9.5 billion in a space of six years; a growth of over a 1,000 percent.

“At the rate that it’s going, it’s going to be close to GHS110 billion by the time Mahama leaves office,” Mr Akufo-Addo told an audience in Canada.

He said: “The future of our nation is being mortgaged and compromised, and that is why it is vital that next year, we put a stop to it and bring sanity to the administration of our country.”

In September this year, he said Ghana’s total debt stock will more than triple by 2020 if President John Mahama’s mandate were renewed at the polls in 2016.

“In 2009, when they [NDC] came into office, Ghana's debt was Ghc9.5 billion; this was Ghana’s debt from Nkrumah’s time to when Kufuor left office.

“Four years later, by 2012 ending, it had gone up more than three times to Ghc33.5billion.

“The NDC got a second term in office, in 2012. We are not even at the end of 2015, but Ghana's debt has shot up another three times to GHc95 billion!” the three-time presidential candidate observed.

Using that trend to compute his prediction, the former Abuakwa South Member of Parliament, told party supporters at Shama, on the final day of his ‘Rise and Build’ tour of the Western Region on Thursday, September 24, that Ghana’s debt stock will hit GHc300 billion if the Mahama administration is given another four-year term.

“What is the future of our youth? What future can they have with these statistics? That is why we have a huge responsibility to reverse the trend of our future and bring Ghana back onto the path of progress and prosperity,” he said.

Dr Bawumia, who has also projected the debt stock, will be hitting almost GHC100billion by the end of 2015 asked: “What fundamental issues that affect this economy have been addressed [by this budget].

Per his computations, the amount of money borrowed by the Government so far is “equivalent to over $37 billion over seven years.”

“Can you imagine what $37 billion can do for this economy?” he asked.