Stop borrowing – Mallam Issah to NPP government

The Akufo-Addo-led administration must stop borrowing and look inwardly for funds to support projects, Mallam Issah, a former Minister for Youth and Sports, has said.

According to Mallam Issah, ahead of the 2016 general elections the New Patriotic Party (NPP) told Ghanaians that the Mahama administration engaged in excessive borrowing in spite of the nation’s rich resources.

He noted that the NPP, then in opposition, said they would not borrow if voted into office but will fall on the availability of the resources in the country.

Mallam Issah, therefore, questioned why President Nana Addo Dankwa Akufo-Addo and his Vice, Dr Mahamudu Bawumia will engage in borrowing when, in their assertions, there are resources in the country to rely on.

“Somebody should tell me what they have used the loans they have borrowed for. I cannot see any corresponding projects to the loans they have contracted and so we need to ask them questions,” he said.

"Dr Bamuwia and President Akufo-Addo told us when they were in opposition that Mahama was borrowing too much and that we had a lot of money and resources in Ghana. Lo and behold, Ghanaians voted for the NPP only for them to come and borrow more than what Mahama did.

“So what are they telling Ghanaians? They have to obey their own words and stop borrowing,” he said on Ghana Yensom on Accra100.5FM on Tuesday, 9 July 2019.

Recently, Dr Gideon Boako, spokesperson for Dr Bawumia deined claims that the NPP said they would never borrow.

In a statement, reacting to similar claims by Tamale North MP Alhassan Suhuyini, he said : “I wish to place on record to Mr Suhuyini, his NDC cohorts and all those who take delight in communicating such falsehood that Dr Bawumia never made any tweets or statements during the 2016 campaign period that the NPP government would never borrow if voted to power.

“I am by this statement challenging Mr Suhuyini or anyone who has evidence to the contrary to adduce same.

“Dr Bawumia and the government of His Excellency Nana Addo Dankwa Akufo-Addo still stand by the principle of responsible public expenditure financing through the optimal mix of tax revenues, borrowed funds, grants or any other sources useful to the development of the country.

“Like the over 13 billion cedis borrowed to save the deposits of over 1.2 million customers of distressed banks and microfinance institutions, government will continue to exercise its discretion of borrowing insofar as it remains important, needful and permissible.

“The government is, however, mindful of the need to ensure debt sustainability, judicious use of borrowed funds, and the productivity that must come with such funds. It is in the light of this that this government has taken the painstaking efforts to avert the mistakes of the past and passed the fiscal responsibility act to constrain government borrowing not to exceed a certain limit of the nation’s gross domestic product (GDP). Politics is supposed to be a decent game and all actors therein must communicate with facts. I urge the media to constantly put everyone to strict proof for every claim made.”

For his part, Minister for Information, Kojo Oppong Nkrumah, stated that loans contracted by the government were used to offset existing ones inherited by the New Patriotic Party administration.

He said contrary to allegations by the previous administration that the current government had borrowed excessively without any feasible developmental projects, the borrowings were used in the country’s interest.

According to him, the government contracted commercial loans to finance old loans and so the national debt would reduce when the required payments were made.

Speaking at a media briefing in Accra, the Minister said growth in national debt did not imply that the government had borrowed excessively.

“The nominal debt of a country can rise because of the disbursement of loan facilities acquired by previous governments, that is, every dollar payment made for a previously acquired loan would add to the national debate,” he explained.

Mr Nkrumah indicated that over 50 percent of the national debt was foreign debt, therefore, a rise in the exchange rate (depreciation of the Ghana Cedi) would also increase the nominal national debt.

The Minister noted that the government had to borrow GH¢120 million to bail out financial institutions during the financial reforms which also added to the national debt. He added that the debt to the Gross Domestic Product (GDP) had reduced from 51.2 percent in 2014, it increased to 55.6 percent in 2015 and it further increased to 56.8 percent in 2016.

In 2017, under this government, the ratio reduced to 55.7 percent, it only increased to 57.8 percent due to the financial sector reforms and has since dropped to 56.8 percent in the first quarter of 2019.