Osafo-Maafo responds to Atta Mills

Accra, July 8, GNA - Mr Yaw Osafo-Maafo, Minister of Finance and Economic Planning on Tuesday said that the increase in domestic debt stock is not necessarily due to additional borrowing but exchange rate differences arising from the stock of external debt.

He said government has not accumulated fresh debt as was imputed by Professor John Evans Atta Mills, Flagbearer of the National Democratic Congress (NDC) at a recent press conference in Accra. He, however, agreed that domestic debt stock was currently at 60 trillion cedis.

Mr Osafo-Maafo was speaking at the Meet-The-Press Series in Accra, which sought to throw light on the goings on at the Ministry and how the economy was being managed over the last two and a half years. He said the total stock of debt had two components - external and domestic stock.

The Minister explained that at the end of 2000, Ghana's external debt stock was 5.8 billion dollars or an equivalent of 30.79 trillion cedis at an average exchange rate of 5,307.82, saying that when added to the domestic debt stock of 9.5 trillion cedis, it puts the total debt stock at 40.29 trillion cedis.

He said at the end of last year, external debt stock was 6.13 billion dollars equivalent to 48.57 trillion cedis, at an average exchange rate of 7,923.73. He said when added to the domestic debt stock of 14.1 trillion cedis, the total debt stock would stand at 62.67 trillion cedis.

He said the difference between the end of 2000 and 2002 external stocks of 330 million dollars, the equivalent of 2.6 trillion cedis could partly be explained by the net resource flow on debt out of which 66 per cent was from loans signed before 2001 and 34 per cent from that in 2001.

Mr Osafo-Maafo said at the end of 2003, the debt stock of 14.1 trillion cedis included the restructured Tema Oil Refinery (TOR) debt of 2.4 trillion cedis taken over by government from the Ghana Commercial Bank books.

He said it was important to note that there were parastatal debts, most of which were previously considered as quasi-fiscal operations or contingent liabilities that had now crystallized.

The Finance and Economic Planning Minister said these debts would be part of domestic debt, once they were taken over by government as direct fiscal liabilities. These included GNPC's debts and the remaining TOR debt.

He argued that even if the external debt stock last year had remained at the same level of 5.8 billion dollars in 2000, by applying an average exchange rate of 7,923.73 cedis for 2002, it would have meant an external debt stock of about 46 trillion cedis.

"This added to the domestic debt stock of 14.1 trillion gives 60 trillion cedis."

He said actual addition to the external debt stock between the end of 2000 and end of 2002 was 330 million dollars, the equivalent of 2.6 trillion cedis.

Mr Osafo-Maafo said it was not true that the World Economic Forum ranks Ghana among the least five attractive investment destinations out of a total of 21 countries, saying, "the latest World Economic Forum Press Release ranks Ghana eighth out 21 countries.

"In the Contracts and Las index, Ghana is again ranked eighth out of 21 while she is again ranked 10th least corrupt among the 21 countries in the corruption index."