Govt. Says Empty Coffers Forced 'Poor' Status

Ghana's new government Monday said empty coffers had forced Accra to accept debt-ridden status -- a move which has sparked widespread criticism from opposition parties and trade unions.

Finance Minister Yaw Osafo-Marfo, who on Friday declared while presenting the budget for the January-December 2001 fiscal year that Accra had decided to join the HIPC (Heavily Indebted Poor Countries) initiative, stressed on Monday that Ghana had no options before it.


Marfo told a private radio station Monday that until March 5 he was against Ghana joing the HIPC scheme of the Bretton Woods institutions.


The scheme allows cash-strapped economies limited loan waivers, which in turn are ploughed back into poverty alleviation programmes.


Marfo said he changed his mind just before the new government's maiden budget because "you have to know how you service your debt in relation to your revenue."


The minister said a British expert and an International Monetary Fund (IMF) team of economists, who carried out two separate surveys on the issue, came to the same conclusion.

"It is not that you are poor but you have a cash flow problem," he quoted them as telling him separately.


The minister said to accept HIPC status "your total exports should be 150 percent of debt payment, ours is 225 percent so our situation is far worse ... so what is all the noise that we are making?"


He said HIPC did not indicate "poverty" as such but was a "definition of your cash flow at the moment vis-a-vis your revenue and the service of your debt."


Marfo on Friday said: "Ghana's debt as of December 2000 was 41.1 trillion cedis (7.5 billion dollars) which represents 224 percent of exports and 709 percent of budget revenue and 124 percent of GDP."


Meanwhile, Ghana's opposition National Democratic Congress criticised the new government for opting to join the HIPC.

Former junior finance minister and party official, Moses Asaga, said "powerful" countries such as France and Japan were against the HIPC "because they have seen the inherent dangers in the system.


"Ghana is not poor, the resources of the country are there for utilisation. HIPC should not be the choice of Ghana," he said.


The influential Trades Union Congress also described the decision as "very disturbing and disappointing.


Dan Ayim Antwi, general secretary of the education workers' wing of the outfit, said the "TUC would not relent in its fight against the country joining the initiative.


"Ghana is not so poor as to join the HIPC initiative," Antwi said, adding that by opting to join the HIPC, the government had "betrayed the trust (of the) Ghanaians."

Finance minister Marfo on Monday said Ghana's condition was like a rich man, who had 10 houses and four cocoa farms, who suddenly falls ill.


"So if somebody says look, because of this situation, we are going to do this so that you get proceeds ... to take care of your difficulties. You can't say that because you are a rich man you won't do it ..."


Ghana's President John Kufuor, elected to power in January, has said his predecessor Jerry Rawlings had left Ghana, once hailed as a model economy in west Africa, in a shambles.


In his maiden speech he spoke of "mismanagement, mass unemployment, low wages, high cost of living, a rapidly depreciating currency, a colossal national debt, high dependency on foreign aid."


Kufuor's budget has targetted a Gross Domestic Product (GDP) growth rate of four percent. The current level of per capita GDP is 390 dollars.

It also pledged to contain the inflation rate at 25 percent. Inflation hovered at around 40.5 percent in December.