Ghana Far Away From HIPC - Finance Ministry

The Ministry of Finance and Economic Planning (MOFEP) has dismissed prognosis by the Institute of Economic Affairs (IEA) on the nation’s public debt, saying it is “a complete exaggeration for any individual or institution to surmise that the nation will be going back to the Highly Indebted Poor Country (HIPC) Initiative.”

Media Relations Officer at the MOFEP and aid to the finance minister, Mr. Abdul Hakim Ahmed, in an interview with the Daily Dispatch in his office, maintained that by the dictates of the current Debt Sustainability Analysis (DSA), it is unthinkable or farfetched for anybody to say that Ghana would be going back to the ignominious HIPC situation.

“The economic dynamics and circumstances have changed from 2001 to 2011 and will keep on changing for the better in the coming years.

For instance, in 2001 when the previous government was going into the HIPC initiative, the (total) debt to GDP ratio was 142.7 per cent.

“For a breakdown, the external debt to GDP in 2001 was 115.7 per cent while the domestic debt to GDP was 27 per cent. However, as am talking to you now the (total) debt to GDP is 38 per cent, far less than the acceptable standard of 60 per cent and the 142.7 per cent it was in 2001 when the nation was going to HIPC,” he stated.

“What is happening is that the size of the economy has been expanding and therefore more space is being created for more borrowing to support the productive sectors of the economy,” he added.

The Media Relations Officer pointed out that what has made the situation unique in favour of this government is that Ghana has now moved into a lower-middle income economy with a bigger economy and therefore bigger responsibilities.

“Ghana’s GDP growth rate last year was about 7.7 per cent and it is expected to increase to about 14 to 15 per cent in in 2011 and thereafter continue in that trajectory in the coming years, especially with the coming in of the hydrocarbon resources. So our middle income status together with our transition to an oil economy has come with some responsibilities”, he added

He said just as human beings will normally move from a stage of infancy to adulthood and therefore has to shoulder a lot of responsibilities on their own, the economy has moved from a low -income status to a lower middle income status with the responsibility of having to borrow commercially to improve it infrastructure.

He stated that the improvement of the infrastructure of the country must be done in a manner that will be consistent with the new status of this nation as a middle income economy and also put in place the foundation for the eventual attainment of a higher middle income status.