The Director of Research at the Danquah Institute, Dr Frank Bannor has said that the main opposition National Democratic Congress (NDC) added more to Ghana’s debt stock when they were in government than the New Patriotic Party administration.
Presenting an overview of the debt situation of Ghana at a press conference in Accra on Wednesday, April 17, Dr Bannor stated that governments borrow because revenue projections are made during the beginning of the fiscal year, during the reading of the annual budget statement.
However, these revenues do not flow in at a rate to match the rate of expenditures.
These in-year fluctuations are managed through short-term debt financing, he said,
Following the attainment of the Highly Indebted Poor Countries (HIPC) completion and external debt relief, he explained, Ghana witnessed a remarkable decline in our public debt to GDP ratio; from 182% in 2000, to 32% by the end of 2008.
The public debt, which was recorded at $8.07 billion in 2008, skyrocketed to $29.2 billion by 2016, indicating a more than threefold increase. This surge propelled the debt-to-GDP ratio to 73.1% by the close of 2016.
“This represents a growth rate, or an increase of about 261.83% in the total public debt stock under the NDC, from 2009-2016,” Dr Bannor stated.
Dr Bannor’s statement comes at a time flagbearer of the National Democratic Congress (NDC) Former President John Dramanai Mahama accused the Akufo-Addo administration of excessive borrowing with no projects to show for.
Dr Bannor said “This rate of change indicates that on average, the NDC government added 32.75% debt to Ghana’s debt stock every year between 2009 to 2016. This trajectory, was even worst between 2012 to 2016. The public debt which stood at $15.3 billion in 2011, increased to $29.2 billion by the end of 2016, indicating a growth rate of 90.85% from 2012 to 2016. Friends from the media, this astronomical increase in the debt stock represents one of the worst management of the public debt in recent times.
“The public debt which stood at $29.2 billion in 2016 has increased to $51.04 billion as at the end of 2023. Contrary to public perception, this marks a little over one and half increase in the overall public debt stock under the NPP.
“This rate of change, represents an increase of about 74.79% in the total public debt stock, compared to a growth of 262% from 2009 to 2016. Unlike the trajectory between 2009 to 2016, the NPP on average, has added about 10.68% to Ghana’s debt stock every year between 2017 to date.
“A rate far lower than the 32.75% witnessed under the NDC. We employ the US dollar in our analysis due to its status as the world’s primary reserve currency, and its widespread usage in international trade. Furthermore, the US dollar is recognized for its stability, maintaining its unit of account and purchasing power consistently over extended periods.
“Friends from the media, another important take away from this analysis is that, foreign currency debt carries an exchange rate risk. This implies that the debt stock in local currency terms, could even rise with no new borrowings.”
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