Posted on: www.dailyguideghana.com
By
William Yaw Owusu
Monday, October 13, 2014
The International Monetary Fund (IMF) is running for
cover after revealing that Ghana’s debt to Gross Domestic Product (GDP) ratio
was higher than what the government had presented as part of the bailout talks
with the Bretton Woods institution.
Sanjeev Gupta, IMF’s Deputy Director of Fiscal
Affairs Department had contradicted the figures submitted by the Bank of Ghana (BoG)
indicating the country’s real debt to GDP ratio last Wednesday at a news
conference in Washington DC, United States.
71%
vrs 55%
According to Mr. Gupta Ghana’s GDP was actually 71%
contrary to the 55% put out by the NDC led John Mahama admnistrtion.
Just as the issue was gathering political storm, the
IMF made a u-turn with a news release that sought to clarify the fund’s
position on the economic situation in Ghana, a move interpreted by many
government officials as an exoneration of government and the central bank.
IMF
Clarification
A statement signed by Ismaila Dieng, of IMF’s Communications
Department said Mr. Gupta’s statement was rather their projected figure for
2015.
“The latest actual figure available to IMF staff for
end-2013 is equivalent to 56 percent of GDP, consistent with the figures
released by the Bank of Ghana.”
The statement further said: “The number (71%)
corresponds to the level projected at end-2015 under our baseline scenario
published in the World Economic Outlook, which assumes the continuation of
current economic policies (very gradual fiscal adjustment in 2015, a more
depreciated exchange rate, and lower growth related to remaining high
vulnerabilities).”
Lingering
doubt
However, some economic experts are insisting that the
IMF in an attempt to explain away the emerging issues have left more questions
than answers.
An expert told DAILY GUIDE that “interestingly the
IMF totally ignored the 2014 figures provided by the Bank of Ghana and rather
chose to stick to the 2013 figures to do the damage control it sought to do,
despite it being the norm that the latest available data is always used by the fund.”
He said “it should be noted that the end of year
2013 debt to GDP ratio of 55.5% is not much in doubt. The real issue is about
the 2014 data of the Ghana Statistical Service and the Bank of Ghana vis a vis
what the IMF found out and believes after its recent visit to Ghana on the
Bailout talks.”
MPC
Admission
The expert reminded the public that the Bank of
Gahan in September 2014, at its last Monetary Policy Committee (MPC) meeting,
stated emphatically that Ghana’s Debt to GDP ratio had declined from 55.5% in
December 2013 to 55.4% as at June 2014 despite the BoG’s own admission that the
debt stock had increased by an amazing GH¢11.5billion in the first six months
of 2014, representing a 22% increase in the total debt stock since the end of
2013.
He
quoted the MPC as saying in September that “the stock of public sector debt as
at the end of June 2014 was 55.4 percent of GDP, marginally lower than the 55.5
percent observed at the end of December 2013.”
Debt Stock Cooked
He
said “Ghana’s debt stock was a total of GH¢52.1 billion as at December 2013
according to the Bank of Ghana. This figure had shot up to GH¢63.6 billion
according to the Bank as at June this year (a growth of GH¢ 11billion or 22%);
on the other hand, the Bank of Ghana is saying that the debt to GDP ratio had
rather declined to 55.4%.”
These
figures in the opinion of the expert don’t add up leaving a wide gap to be
filled.
The
expert said that the debt stock figure provided by the BoG “flies in the face
of the IMF figures for 2014 as the IMF projects that Ghana’s debt to GDP at the
end of 2014 will be a colossal 65.3%.”
“Clearly,
there cannot be a 10% jump in the debt to GDP figures in only a space of 6
months, especially when an increase of GH¢11billion or 22% in the debt stock in
the first 6 months had rather seen a decline in the Debt to GDP ratio and this
is the clearest indication that the Bank of Ghana 2014 figures were cooked to
make the books look good. This was primarily done to make Ghana’s debt look
sustainable.”
IMF’s Logic
He
said that per the IMF’s projection for end of 2014, it would mean that “rather
than declining, Ghana’s debt to GDP had even crossed the 60% mark as at June
2014 contrary to the Bank of Ghana’s figures.”
“The
Bank of Ghana figures which suggested a marginal decline in the debt to GDP
ratio as at June 2014 despite the huge increase in the debt stock over the last
6months, was primarily based on the Ghana Statistical Service’s GDP data which
had revised its data to show that Ghana’s GDP for 2013 had grown by 7.1% and
that the growing by around 7% in 2014.”
He
said the figures made the size of Ghana’s GDP large and as a result, lowered
the Debt to GDP ratio saying “thus because of the inflated GDP according to the
GSS figures, Ghana’s debt seemed sustainable.”
Cooked Figures
The
expert pointed out that the IMF after their initial visit to Ghana to discuss
the bailout quickly realized that the GSS numbers on the GDP “were cooked” and
quickly revised the GDP growth from 7.1% to 4.6%.
“This
downward revision means Ghana’s GDP is actually smaller than had first been
anticipated and explains why the IMF is maintaining that the Debt to GDP ratio
will be over 65% at the end of December 2014.”
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