Explain GHS1.7bn shortfall in budget – Bawumia tells Gov’t

Dr. Mahamadu Bawumia, the vice presidential candidate of the New Patriotic Party (NPP), has called on government to explain to a discrepancy of GH¢1.7 billion in the 2016 Supplementary Budget to Ghanaians.

Speaking at a recent lecture at the National Theatre in Accra, Dr Bawumia stated: “The 2016 supplementary budget has further muddied the waters by revealing a large unexplained discrepancy of GH¢1.7 billion in 2016.

It is a figure that the government has been unable to explain. How can an amount of such a magnitude still be a mystery almost a year later? What is the government hiding?

It appears that even though this is money that has been spent, the government is afraid to come clean because it will likely lead to a missing of the IMF performance targets.”

Should this be confirmed, that would mean that the fiscal deficit for 2015 is actually higher than what has been reported, he said.

He said that undermined the credibility of the government.

Arrears accumulation is the likely explanation of the discrepancy because the report about rising non-performing loans in the banking sector due to debt not being paid by public institutions which was being driven by government’s inability to pay its debt to institutions such as ECG, VRA, among others, the vice presidential candidate stated.

Gov’t borrowings

Dr Bawumia revealed that government has borrowed some $39 billion in eight years, adding that by December 2016, the amount will be at least $42 billion.

“The government will claim that the book value of the debt is $26 billion so it would be impossible that they could have borrowed close to $39 billion. Quite frankly this is a weak argument.

The only reason why the book value of the debt is some $26 billion is because we are applying today’s exchange rate which the same government has succeeded in collapsing to value the debt and not the exchange rate at the time the money was borrowed. With this major increase in debt, Ghana’s debt to GDP ratio, using the book value of the debt, has increased from 32 percent in 2008 to 72 percent at the end of 2015.

“Interestingly, in the presentation of the supplementary budget in July 2016, the Minister of Finance stated that Ghana’s debt to GDP ratio has declined from 72 percent in December 2015 to 63 percent in May 2016. Unfortunately and sadly, this is untrue.

The calculation of the debt to GDP ratio used by the Minister is just plain wrong and misleading. The government has taken the total debt stock in May 2016 and divided it by the projected GDP for December 2016 to arrive at a debt/GDP ratio of 63 percent.

“This is statistical gimmickry. If you ask the Minister how he achieved the dramatic reduction in the debt to GDP ratio in either January or May 2016, he would be unable to tell you. All that has happened is that he has used the higher projected GDP number to do the calculation.”

Total debt

The vice presidential candidate said Ghana’s debt-to-GDP ratio is at 71.1 percent and not the 63 percent reported by the Minister for May 2016 for which he used projected December GDP data.

Gov’t commends itself

Although government has imposed untold hardship on Ghanaians, President John Dramani Mahama continues to tout his achievement. Addressing Muslims recently, President Mahama said his administration had undertaken a lot of projects to improve the livelihood of Ghanaians.

“We are expanding our ports, we are building more airports, we are upgrading others to international standards, and we are providing more buses to create easy transportation linkages between our towns and villages,” he said.

Government, he noted, has built new roads and rehabilitated several others across the country to facilitate the movement of people and goods.