TERKPER EXPLAINS PUBLIC DEBT

 Seth Terkper - Ghana's Minister of Finance and Economic Planning

Posted on: www.dailyguideghana.com

By William Yaw Owusu

Monday, December 2, 2013

The Minister of Finance Seth Terkper has called on the public not to see the country’s mounting debt stock as a negative phenomenon.

Rather, he says Ghanaians should consider the nature of investments that the loans go into before making criticisms.

According to the Bank of Ghana’s Monetary Committee, the total public sector debt stock as at the end of September 2013 was GH¢46.1 billion, which is 53.5% of the GDP from GH¢ 35.1 billion at the end of December 2013.

Per the MPC’s analysis, the total public sector was made up of a domestic debt stock of GH¢ 24.9 billion, up from GH¢18.5 billion in December 2012 and external debt stock of $10.8 billion, up from $8.8 as at the end of December 2012.

Some sections of the public continue to express grave concern about the government’s excessive borrowing.

Others have argued that in spite of the excessive borrowing, there is nothing to show for it in terms of infrastructural development.

However, at the maiden edition of “The Forum” put together by Channel Two Communications to explore solutions to national challenges, the Finance Minister disagreed with those who think negatively about the public debt stock.

“I think that we should not look at public debt in negative terms only.

For instance we borrowed to construct the Akosombo Dam because it would have taken us probably 40 years to rely on our own income to complete that dam. We borrowed to do the Bui Dam, which will be functioning fully soon.

We are seeing the benefits. I think there is no denial of the benefits of the Akosombo Dam to the country,” he said.

“We borrowed to do Tema Harbour, we borrowed to do a lot of strategic national projects including our roads. If we borrow to do good investments, I don’t think they are that bad.

“I am aware of the headlines that the national debt is so much. The investment we do and the type of loans we take must be considered when talking about public debt.

“If you look at recent borrowing that we have done, we borrowed for the Bui Dam, roads, gas processing plant we are just taking steps to diversify the economy.

“We could have allowed the gas to be flared and just because you fear your public debt you do not want to get a diversified economy.

There are tangible things we are borrowing to do. The important thing is what we borrow for and what projects we undertake.

Mr. Terkper, who has been described by many as a technocrat, said the reason why the debt stock seemed outrageous is that the government guarantees loans taken by all state owned enterprises because they are not strong financially to do it themselves.

“Because we have SOEs which are not strong and cannot borrow on their own balance sheets, the government guarantees the loans that they take and the entire loan of these SOEs are treated as public debt.

For instance the gas processing plant once it starts producing finally, it can easily repay the entire $3 billion loan secured for the project and added that the situation is the same with the Bui project.

“There is no distinction for commercial self financing loans and general loans that we secure to build say hospitals.

He said that “we will set up an account for the repayment so that the international financial institutions will see things for themselves.

“That way, we will classify the public debt into the one the taxpayer has to pay and the ones projects are going to pay.