Ghana Economy in Three Critical Areas; National Budget, Debt Management and Stability


I’m not interested in awarding marks for today’s meet the press by the President and his team l will rather focus on the key observations.

The president seems to appreciate all his appointees and therefore added some positive adjectives to their names for example Hon Ada an experience minister and Dr. Bawumia a competent Vice President .This approach is positive.

I was however, extremely surprised when the President could not speak to job creation within six and half months of managing the economy especially when the theme of the 2017 Budget boldly printed on the cover page is “Sowing The Seeds For Growth And Jobs” Also when the government promised about 750,000 jobs through planting for food and job programme launched early this year.On the question of borrowing , GDP and deficit and statements in the National budget there is the need to becareful as budget statements are projections and not actual performance.

To say for instance we have reduced the deficit to 6.5% in the Asempa budget and GDP is around 200billion Ghana cedis is misleading . There are allocations to various ministries and some have not received any actual disbursements. The GDP projection for 2017 is around 203 .4billion Ghana cedis and gain quoting this as if is the actual, is problematic. The debt stock has gone up because we have borrowed to Finance deficit and therefore our borrowing is not smart borrowing. Debt to GDP will only reduce marginally though GDP assumes upward trajectory the reason is simple we have borrowed unreasonably very high. We should bear in mind we have a lot of debt repayment from 2017 to 2021 when most of our recent bonds are due for payment. We do not pay debt to GDP ratio it is only a relevant indicator . We are going to pay the debts we are accumulating with speed with actual revenue so we can not hide. Greater portion of the borrowing within the first halve of the year appear to be for consumption .

It is unfortunate that the the reduction in the policy rate together with lower treasury Bill rate is not yielding reduction in lending rate. Lower treasury bill is supposed to serve as benchmark rate for other interest rates. But this is not the case. Dealing with non performing loans and payment of arrears are necessary to activate response from banks to reduce lending rates. The IMF programme has already been extended from April 2018 to December 2018.

The reality is that with or without IMF programme most MMDAs are under budget and under funded very soon some maybe incapacitated to deliver public service. It is also possible that most of our sensitive public service delivery entities such as Training colleges, hospitals, Food and Drug Authority and Standard Authority maybe without cash and accumulate new debts for taking relevant supplies on credit. We must improve and diversify our revenue generation .

Source: Dr. John Gatsi

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