Parliament approves annual public debt amidst heated debate
Parliament has approved the Annual Public Debt Report for the 2018 Financial Year after a heated debate between the Majority and Minority members on the floor of the House on the figures presented.
The Minority caucus criticized the government for bloating the nation’s debt stock from GH¢122 billion to GH¢ 173 billion, whilst the Majority side applauded the government’s economic management team for sound economic management.
Dr Mark Assibey-Yeboah, Chairman of the Finance Committee, presenting the Committee’s report, informed members that the objective of government’s debt management was to ensure that government’s financing needs were met on timely basis at the lowest cost consistent with a prudent degree of risk.
He said government’s Medium Term Debt Management Strategy (MTDS) was to bring the public debt level to below 65 percent of GDP over the medium term.
For the year 2018, the MTDS was to finance the budget deficit using domestic securities (preferably long-term bonds) and external financing, including the International capital Market (ICM).
Dr Assibey-Yeboah also stated that the aim of the report was to outline and disseminate information on government borrowings and other debt management operations, guarantee and lending activities of government and other financial arrangements entered into by government for the year 2018.
He said the report was meant to publicize information on Ghana’s public debt portfolio and debt management activities carried out over the past year to stakeholders, including lenders and investors in government securities as well as the general public.
The Chairman announced that in 2018 Ghana successfully issued a US$2 billion Eurobond in May 2018, which was the sixth time the country had participated in the International Capital Market.
He said the 2018 Eurobond consisted of US$1 billion 10-year bond and landmark 30-year bond of the same amount priced at 7.625 percent and 8.625 percent respectively, and that relatively lower interest rates were achieved notwithstanding the global capital market turbulence triggered by increasing US interest rates, currency crisis in some emerging and developing economies.
Mr Cassiel Ato Forson, Ranking Member on Finance, expressed concern about Ghana’s growing public debt, and expressed worry on the inability Ghana to service its debts, adding that, recent World and IMF research showed the country’s debts sustainability would be a problem.
“Also, country’s external debts are also increasing but unfortunately the nation is not mobilizing enough to service it”, he added.
Mr Kojo Oppong Nkrumah, Minister of Information in his comments on the report stated that the rate of debt accumulation has slowed down to 14.5 percent in 2018 compared to 22 percent in 2016 under the erstwhile NDC administration.
He disputed the claim made by Mr Forson that Ghana’s debts stock has reached an epidemic level, and said the figures from the report did not support that.
Mr Nkrumah said Ghana’s debts position was healthier, and the nation would continue with the current debt management strategy.
Mr Isaac Adongo, MP for Bolgatanga Central Constituency criticized government for increasing the Ghana’s public debt to unsustainable “catastrophic levels,” and accused the Government of trying to “massage the country’s public debt figures to look good in order to deceive people”.
He said the debt- GDP-ratio in 2016, which is 55.6 per cent, was far better than the 2018 debt- GDP-ratio, which stood at 57.9 percent.
Mr Alexander Afenyo Markin, MP for Efutu Constituency in commenting on the report chastised the erstwhile NDC administration for their reckless spending, which he said led them to the IMF for policy credibility.
He argued that despite the government’s expenditure in the Implementation of the Free SHS Policy and other social intervention policies, it had still been able to bring down deficit to 3.9 percent.
He said though the debt stock of Ghana was growing under the NPP administration but at slower pace, which was more favourable than before.