One year after the new government came to office, it is shocking to hear Ghana’s public debt has risen to GH¢138billion. The huge Dracula-like debt the previous government left was GH¢122billion; therefore, not decreasing it means government has only limited borrowing to slow down the debt pile-up.
If our revenue cannot pay our debts, then we are doomed. Our debt situation is bad, but it will move from bad to worse if we continue borrowing to service debts. Our credit-crazy country is still in its borrowing frenzy mood, but this time from a cautious position.
Policies have been introduced to instil macroeconomic discipline, with encouragement for private sector job-creation. The hard work of fiscal adjustment and taming inflation is rightfully underway.
However, it is not yet quite a time to celebrate the economy. The economy is like a glass half-full which can be emptied at any given time. Though there is economic progress, it is yet to reach firing on all cylinders of output to decrease debt.
Ghana has fallen into a huge debt-hole, and when government decides to invest more in public projects we will be found wallowing in spontaneous debts. We’ve incurred GH¢16 billion debt in a one-year period without any landmark project.
Given ‘anaemic’ productivity worries and our appetite for spending, we will continue borrowing. Government may have slowed down borrowing but the time will surely come when it has to borrow more to meet major projects. This is when borrowing with impunity will set in.
In African politics the masses want to see tangible projects rather than social interventions – which is why cutting the sod for major projects has forever been part of African politics.
If your productivity cannot help match your revenue targets then borrowing becomes the main option for deficit financing. To finance deficit needs huge capital but how do you achieve this without going to borrow.
It seems our debt stock may never come down and will continue to haunt governments to come. The new government’s frustration on debt may soon manifest, for you cannot continue tellinng the public there is debt so you won’t borrow to spend on mounting massive projects.
There has to be money for government’s promise of US$1m per constituency, One Dam, One Village as well as the factories. Roads await, as well as health, creating jobs through agriculture, and also meeting the high salaries of about 600,000 public sector workers.
From the position of where we were when the new government took over the economy, achieving normality in less than 24 months is an over-ambitious aim. There will surely be set-backs and there is no way the take-off will be as smooth as ever. An economy that can’t withstand external shocks will surely be challenged at a point
Making economic reforms and sustaining them will be the defining challenge for government. The debt now stands at GHؖ¢138bn and it’s never going to drop; so, with projects lingering for the future, are we still going to limit borrowing or will we step up in the borrowing market?
Certainly, the glass half-full Ghanaian economy will be tested in the future; hence, there’s no need for economic jubilation now!