No more addition to the debt stock, Ofori-Atta insists

May 18, 2017
Source: l Ghana
No more addition to the debt stock, Ofori-Atta insists

Finance Minister, Ken Ofori-Atta has stated, with emphasis, that government will not be adding to the country’s debt stock even if the loan comes at a zero percent interest rate.

“For our ministry, it is going to be in the sense of no more debt, no more debt. Whether it is zero financing or half financing, because you are adding to the stock, which is the important thing,” he said on the second day, May 16, of the National Policy Summit which came off in Accra.

Per GDP projections for this year, the Finance Minister said debt to GDP ratio had declined to 62percent, from the much dreaded 72percent in 2016.

This notwithstanding, he said the country cannot continue hiding under the illusion that “it is a matter of debt sustainability,” and continue borrowing.

“Let us not get lured to get more debt onto our books while hiding behind debt sustainability. We should just say: as a country, we want to be at a point of 40 or 50percent.”

Both government and private sector actors agree that the US$30billion public debt stock is too high and needs trimming.

Even though Mr. Ofori-Atta recently raised some more debt to the tune of US$2.5billion, he is of the view that the net debt stock stayed flat since the new debt was used to re-profile old and short-dated instruments into longer dated ones.

The finance minister noted that Ghana must begin negotiating a different engagement, beyond an IMF instrument of US$1billion, so, “we can truly tackle the stock of debt, release resources and then we can make real inroads in private sector growth and take our nation from poverty,” he added.

Ghana, he said, has to show the world that it is not going to stockpile debt but will put in strategic measures to increase revenue, stop leakages in expenditure and then change the narrative to say: “the black star is ready to shine again.”

He explained that during Senior Minister Osafo Maafo’s time as Finance Minister, Ghana had the chance to take advantage of the Highly-Indebted Poor Countries (HIPC) and he utilised it to good effect.

“He took us there and brought us out. It was a moment in time when that instrument was available and he used it and used it well.  But I think there is no question that where we are, we need to structure something different that will relieve us of the strangulation of debt and free us to create an economy that is vibrant and will be a demonstrative effect for the region,” he added.