Stop using wrong indicators to assess Ghana’s fiscal economy – Dr Boakye to IMF

• Dr Boakye said the IMF and other rating agencies use wrong indicators to measure Ghana’s economy

• He advocated that the correct measure of a country debt burden is how much out of your revenue you are using to service your debt

• He called on the government to strategize measures to develop the economy

An Economist, Dr Saed Boakye, has slammed the World Bank, the International Monetary Fund and all other rating agencies for using wrong indicators to assess Ghana’s fiscal economy and growth.

He noted that it is wrong for these institutions to rely heavily on the debt to Gross Domestic Product ratio to measure the country’s financial capacity to repay its numerous borrowings.

In an interview with JoyNews monitored by GhanaWeb, Dr Boakye noted that the government failed to come up with proper measures to sustain the economy explaining that the initiative to raise US$1 billion through the sale of the sustainable bond to refinance domestic debt used for social and environmental projects, including loans taken to service the free senior secondary school policy, is good but a better approach could be used.

“The IMF and World Bank must stop talking about debt to GDP ratio. I have data over here; in 2019 for instance Ghana’s debt to GDP ratio was around 62% and interest payment as a ratio of revenue was 37%. Britain’s debt to GDP ratio was 85% in 2019 but interest payment as a share of revenue was only 6.9%. You, your debt to GDP ratio was 62% and you were using 37% to pay interest in 2019”.

“The correct measure of a country debt burden is how much out of your revenue you are using to service your debt; that is the bottom line.” He said.

He questioned whether the country has raised enough revenue comparing the debt to GDP ratio.

“So if you are a rating agency, IMF, World Bank and you keep on talking about this intermediary measure which is debt to GDP ratio, it is only an intermediary measure because it’s important that GDP is computed with government revenue. So if the debt to GDP ratio is small, then the assumption is that. But the question is has the country raised enough revenue?” he stressed.

“Britain is having total revenue to GDP of about 39%, Ghana is around 15%. So if their debt to GDP ratio is about 55% and your debt to GDP ratio is 72%, they are able to raise enough revenue than you”, he added.

However, Ghana’s interest payment is presently estimated at 49 per cent to revenue in 2021.