Ghana to pay Ghc10m as interest over public debt

Ghana’s total public debt of GHc95 billion will this year attract an interest rate of GHc10million, Ranking Member of the Finance Committee, Dr. Anthony Akoto Osei has revealed.

The situation, he says, paints a gloomy picture about the economy which debt levels have been projected to exceed GHc100 billion by the close of the year.

He told Fiifi Banson on Anopa Kasapa on Kasapa 102.3 FM on Wednesday that the country’s continuous borrowing to invest in unprofitable ventures is seriously hurting the economy, cautioning that if care is not taken, the Greece experience will soon befall on Ghana.

“Our debt in 2009 was GHc9.5 billion but now we are above GHc95 billion and by the time the year ends, we will be over GHc100 billion. Now the question is how can we pay this debt? The interest rate alone on our overall debt this year is GHc10 million. If you use this money to pay debt and you don’t have money to build schools, hospitals then where are we going?”

“If we borrow to invest in a good projects like the Atuabo Gas Project even though it over cost us, there is no problem because the infrastructure gives us gas, LPG and can help us recoup some of the money to pay the debt but if you borrow and invest it in SADA for people to embezzle the funds and you can no longer pay your debt, it means you have a problem,” he noted.

He added “If you are a country and you cannot pay your debt, people will make mockery of you and your assets will be targeted. If you look at the Greek experience, you cannot spend to a certain level. So, we should make sure that we never get there because when that happens, people will not be able to work, and the situation will become worse”.

He said the country’s debt to GDP ratio of about 71% should be a worry to all since it has so many implications for the country.

“When we went to HIPC, we got a debt relief of about US$4bn for about twenty years but now that we have been classified as middle-income country, no country will grant you debt relief.”

Our growth rate to GDP is declining. We are now about 3%. That is why people are panicking but if you look at where we are now, our capacity to pay the debt is low and if we don’t take care, Ghana will be like Greece and people cannot withdraw money exceeding GH?50.”

Ghana, he said is now classified as a Highly Indebted Middle-Income Country (HIMIC).

When asked by Banson about the debt ratio of Austria which is 8.5% compared to Ghana, Dr. Akoto Osei who is a former Minister of State at the Finance Ministry said the country cannot be compared to European nation whose foreign reserves far exceeds that of Ghana.

“In Ghana our reserves are now about $4 billion whereas in Austria, their reserves are in excess of over $100billion. If you look at the standard of living in Austria, you can’t compare it to that of Ghana. When you are suffering and at the same time owing a lot of money, it is bad. If today, those that we are indebted to come after us, each of us will have to pay about GHc4,000. Will we be able to pay them? No, we can’t because we don’t have assets.”

According to him, Ghana after discovering oil in commercial quantities became complacent and had the belief that once it has the black gold and borrows, it will be able to repay.