Posted on: www.dailyguideghana.com
By William Yaw Owusu
Wednesday, October 14, 2015
The Convention People’s Party (CPP) has taken a swipe at the National Democratic Congress (NDC) government for ‘misusing’ facilities that would enable the country to pay its mounting debt.
“The NDC Government has not been transparent with the use of funds from what has become an annual raising of funds through a Eurobond,” Nii Armah Akomfrah, newly-elected General Secretary said in a statement issued in Accra yesterday.
Debt is currently swallowing the country with total debt running into GHC100billion while more loans are being contracted.
“With the NDC Government resorting to a third Eurobond in as many years several questions arise on government debt policy. Certainly the 10.75% interest is astronomical and the highest on the continent, with some rates on the continent as low as 3%,” he said.
The statement said that the ‘much touted over subscription’ of the Eurobond was which government officials said was far from being a measure of investor confidence in our economy “is rather indicative of Government desperation with its generous rate of return to foreign investors.”
According to the CPP, “sources of funds for government intervention in economic development are typically tax revenue and debt – the last resort to address deficits in government budgeting.”
“Structural deficits is indicative of the need for structural reform of the economy and that requires government intervention in strategic productive sectors using debt finance. So the question is whether government utilization of debt is aimed at structural reform that deals with the deficits.”
The CPP said that loans and debt in the development history of the country “reveals a tale of government policy riddled with corruption.”
“We believe that Government must set out clearly how monies raised from these bonds will be used and how they will be paid back. This can be done and must be done because as the CPP Government had shown very clearly on its funding of the Akosombo Dam for example and the payback of the loan which was paid back on due date.”
The opposition party said the government was demonstrating its inability to manage Ghana’s economy by opting for the highest Eurobond rates in the history of this nation.
“The issuing of a Eurobond on the back of an IMF bailout programme is also further indication that government indeed has no economic strategy to turn around the fortunes of Ghana for the good of the people.”
“Ghana’s high debt level of about GHC 94.5 billion is unsustainable and very worrying for this generation and future generations particularly as it is not geared towards productive use and the lack of effort by past and present governments to reduce the debt level is increasingly very disturbing.”
“After raising $750 million in 2007, successive governments have resorted to the international capital market and Eurobonds which is supposed to offer advantages of cheaper borrowing but it has been far from that.”
They said that huge external borrowing is supplemented by huge internal borrowing with Government of Ghana Treasury Bills offering about 25.3%, adding “this is because of government’s unmanaged, unchecked and unyielding appetite for borrowing on the domestic market also.”
The CPP said that many Ghanaians viewed the borrowing as “going to pay cronies and as noted by the Finance Minister $500 million of this particular debt will be to retire other maturing debt, so called Liability Management.”
“Using borrowed funds at a coupon rate of 10.75% to pay maturing debts is not only the laziest way to manage an economy that has numerous resources but the most wasteful. Higher rates to pay debts that were incurred at lower rates is bad economic management and does not make economic sense.”
They said the cycle can only be halted with a CPP government “that believes in industrialization and lessons must be learnt from the CPP on its policies.”