Government must be transparent on how loans were used - Alex Mould
Former Chief Executive Officer of Ghana National Petroleum Corporation (GNPC) has called on the government to be transparent with the use of loans which accrued debts so Ghanaians could appreciate the effort.
According to him, the latest reports of Bank of Ghana on economic data pointing that the country’s total public debt was GHS2 billion, short of GHS200 billion, is not real good indicator to the country.
The Bank of Ghana recent data revealed some 57.5% of Gross Domestic Product (GDP) as of the end of March 2019.
The data, released last week indicates that Ghana has added about GHS 21.4 billion to the public debt record in the first quarter of the year 2019.
The report also pointed positively to an increase in Foreign Direct Investment (FDI) making Ghana one of the most potential competitive investments destinations in the Africa continent.
But in a social media post, Mr Mould said, "GDP is not really a good indicator as it includes revenues that do not accrue to Government directly like cocoa receipts (60-70% go to the farmer) and petroleum receipts (only 20% accrues to Government)."
He argued that, from a cash management perspective there was the need for the government to focus more on it own revenue as against the debts accrued.
The former CEO of GNPC noted that government needs to focus on the ability to pay back the loans, thus the debt servicing capacity, principal and interest which comes only from government free cash flow (FCF).
In the view of Mr. Mould, "What is relevant is for government to be transparent on the use of the debt incurred so that the taxpayer would appreciate the effort and not just released out figures and taunting.
He said it is against economic management policy for government to use debts to pay for consumption and wages and not put into production and investment to generate more revenue to shift up the GDP.
"If government is using debt to pay for consumption and not put into productive use - where there will be incremental revenue accruing to the country ie increasing the GDP, which will result also in increased taxes for government that can be used to pay back the loans taken, then this gives us (and the other stakeholders like IMF and WB) some comfort," he stated.
Mr Mould noted that it would serve the nation better if government could swallow pride and let the people of Ghana know and appreciate the challenges so they could be encouraged to do the right thing.
“But where Govt behaves arrogantly and does not believe that we the citizens need you to know these things then there is a need for us to rise up and encourage them to do the right things," the former GNPC Boss stated.