49.5% of Ghana’s entire tax revenue will be spent on debt servicing this year – Analyst

A Financial analyst, Toma Amihere, has pointed out that in this year alone 49.5% of Ghana’s entire tax revenue will be spent on debt servicing.

He explained on the Sunrise show on 3FM Tuesday April 13 that this will have dire consequences on the financial health of the country.

“The bottom line is this, this year, 49.5% of Ghana’s entire tax revenue will be spent on debt servicing, and that will be on the interest alone” he said while contributing to a discussions on Ghana’s debt situation,” he told host of the programme Alfred Ocansey.

He blamed the huge debt stock on political decisions. “It is as much a political problem as it is an economic problem, a government in power, because it has access to rational capital market where it can borrow long term without having to explain what it is using the money for, can borrow the money, use it to do some development project in order to please voters in order to win reelections and the problem becomes somebody’s else problem, and at the time the loan matures, it has left power long time and somebody else has entered and that is what successive governments has been doing.”

Asked whether or not there is a remedy to this satiation, he said, “with our debt-to-GDP ratio as high as it is, I wonder how easy that will be”

The 2021 budget statement presented to Parliament by leader of government business Osei Kyei-Mensah-Bonsu has pegged Ghana’s fiscal deficit at 13.7 per cent of Gross Domestic Product (GDP).

This deficit, according to the budget, includes the cost of the financial sector cleanup up.

“The fiscal deficit including the financial sector cost for 2020 is 13 .7 per cent of GDP,” the budget said adding that “it was financed from both domestic and external sources.”

Regarding Ghana’s debt stock, the budget said the total debt rose from 122billion in 2019 to 291.6billion as at the end of December 2020.

The debt includes the cost of the financial sector cleanup, the majority leader added.