'We've not been declared HIPC; that's a fact' but Mahama has a point – Seth Terkper

A former Finance Minister in the erstwhile John Dramani Mahama administration, Seth Terkper, has told Kwabena Bobie Ansah on Accra 100.5 FM’s ‘The Citizen Show’ that Ghana has not been declared a Highly Indebted Poor Country (HIPC).

Asked by Bobie Ansah when he appeared on the show on Wednesday, 28 October 2020 as to whether or not Ghana was now a HIPC country, Mr. Terkper said: “We have not been declared HIPC because the HIPC programme is virtually wounded up, so, yes, you can say that we’ve not been declared HIPC”.

“That is a fact”, he added.

Former President John Mahama, who is also the presidential candidate of the main opposition National Democratic Congress (NDC), on Monday, 26 October 2020, told different groups of professionals with whom he interacted in Accra, that: “The IMF, in its sub-Saharan Africa Regional Economic Outlook, forecasts the current rate at a frightening 76.7% of debt-to-GDP ratio”.

“Officially”, Mr. Mahama announced, “Ghana is back to HIPC status under Nana Akufo-Addo and Ken Ofori-Atta”.

In Mr. Terkper's view, even though Ghana has neither applied for nor been declared HIPC, his former boss has a point worth paying attention to.

“… The [former] President is saying that: ‘Look at where we stand today’; you can see from the narration that he’s doing”.

“And, by the way, if we are at 77 percent or we are projected to be at 77 percent by the end of the year, and, in the first quarter, you’re going to borrow GHS5 billion, that will take you above 80 percent.

“So, I’m saying that depending on the payments that we make at the end of the year, which is the net that has been given as 77 percent…” Mr. Terkper said.

Mr. Terkper, however, clarified that: “You go to HIPC by applying, if I may put it that way”.

“So, to the extent that we have not applied, technically, we are a middle-income country, so, let’s put it in context: At the time we went to HIPC, we were a developing country; you measure lower-middle-income countries differently from developing countries.

“If you want to retain your B ratings and the rest, then you have to be within 55 to 60 percent [of debt-to-GDP ratio], which is where we were headed”, he pointed out.

Currently, he noted, the “IMF says we’re at 77 percent”.

“The Minister [of Finance], today [Wednesday], was quoting 2019 figures. We’re at 77 percent of GDP estimated at the end of 2020. Let me give you one example; maintaining an average fiscal balance below the 5 percent threshold between 2017 and 2019, as compared to the average of 6.3 percent in 2014 and 2016.

“But here is a minister, who is projecting where we are supposed to be at the end of the year so that he can make estimates of where the country will be when he submits the quarter for 2021.

“So, the relevant thing, we know; the IMF says we are 77 percent. His [Finance Minister] own mid-year review says that the deficit is 11 percent, so, why are we not using, at a minimum, the mid-year review figures?” Mr. Terkper wondered.