Kwabena Adjei educates President John Mahama on public debt

President Mahama, in his State of the Nation Address, indicated that public debt as of December 2024 amounted to GHS 721 billion, equivalent to 70.6 percent.

In 2016, the NDC government left a total public debt of GHS 122 billion (73.1 percent of GDP at 2006 constant prices). Indeed, after the rebasing of 2013 prices, the debt to GDP ratio reduced from 72.5 percent in 2006 constant prices to 57 percent in 2013 constant prices.

Similarly, the economy is rebased within the next 2 years, the recalibrated GDP will likely increase by 15-20%, which will lead to a decline in the current debt to GDP ratio.

Please, Mr. President, don’t lament on the debt because you are not going to reduce it. No government has ever repaid our debt to reduce it, unless through debt forgiving. And at the level of Ghana’s development, no objective economist expects you to do that. At the end of the next four years, the right question will be how much did you add to the debt stock? In fact, the level of debt stock should be the least worry of your government since you are never going to repay and reduce it. At best you will repay with further borrowings.

Since you are not going to repay and reduce our debt stock, your problem should be debt service. This is where you are the luckiest president. Your government is going to enjoy the lowest debt servicing in this era.

Your predecessor went on the route of the most politically costly domestic debt exchange programme to enable the country to benefit from the much-needed fiscal space, especially in external debt servicing.

This has provided the country with enough breathing space, but you will not recognize how important that policy is. Yes, some domestic investors including pensioners suffered from the programme, but the truth is that Ghana is the sole beneficiary of the programme and perhaps your government.

Mr. President you lamented that the total debt servicing for the next four years will amount to GHS 280 billion (circa $18.7 billion).

Please compare this with ONLY the interest payment and the foreign debt amortization component of debt service in 2017-2020 that amounted to GHS 109.4 billion (circa $27.4 billion) (don’t be deceived by the nominal values in cedis).

Please, where do you think this huge fiscal space that your government is going to enjoy in the next four years is coming from? You may call it the crime scene, but that is the benefit of the most difficult decision any politician has taken in the interest of the country but at the cost of losing power.

Please don’t talk about debt and debt servicing so far as Ghana is concerned because you are heading the luckiest government to benefit from the debt restructuring. Please be quiet, make good use of the available fiscal space for something concrete for the good people of Ghana.

Writer: Kwabena Adjei