GhanaWeb TV




Business24 Editorial: Ghana's debt position scary

Debt Economy New Ghana spends most of its revenues on paying workers’ salaries and wages

Mon, 15 Mar 2021 Source:

The 2021 budget was last week presented by Osei Kyei-Mensah-Bonsu, the Minister of Parliamentary Affairs.

Following the devastation caused by the covid-19 pandemic, this year’s budget was one of the most highly anticipated. It was no surprise that the budget was christened: “We are moving forward.”

As the first major budget since the pandemic struck a year ago, it was expected that the statement would consolidate the several scattered policy directives announced last year as the virus hit the shores.

The statement was also expected to offer the clearest picture yet of the full extent of the damage caused by the virus. As it turns out, the country’s debt position has been aggravated by its inability to raise more revenue even as it incurred unplanned expenditure.

The country’s ballooning debt had occasioned the biggest fiscal deficit in the country’s recent history. Quite apart from the deficit, it also emerged that the amount of money the country spends on servicing its debts has reached alarming levels.

Typically, Ghana spends most of its revenues on paying workers’ salaries and wages. But a careful analysis of this year’s budget shows that interest payment has overtaken compensation to workers.

The overtaking is not only troubling but the fact that the difference between the two expenditure items is over GH¢5billion must be a grave source of concern. Already, the IMF and its allied institution have classified the country as being at risk of defaulting on its debt obligations.

Though the government had downplayed this creeping debt situation, it doesn’t negate the fact the nearly half of domestic revenues mobilised would be used to sort out interest payments.

Interest payment and compensation to government workers alone consume nearly all of domestic revenues collected – which would mean that more borrowing would be needed to execute the government’s budget.

This paper would call on the government to, as a matter of urgency, consider drastic measures to arrest the situation.

Related Articles: