The former Finance Minister Seth Emmanuel Terkper stands vindicated in all his projections and the warning sign post he mounted in the course of the fiscal year under review in terms of his long standing critique on government’s reporting of parallel figures to the IMF as against what they present to Parliament.
He had also been cautioning the government on it’s breaching unsustainable debt levels and deficit financing by the Bank of Ghana (BoG).
It appears the Central government and the Bank of Ghana is steadily ‘coming around’ the former Finance Minister’s long standing position on all the above issues pointed out and are beginning to wrap their heads around the stack reality as was tacitly admitted by the Governor of BoG Dr. Ernest Addison at a lecture he gave last week during the Annual Legon Alumini Association meeting in Accra.
In an exclusive interview with the former Finance Minister to elicit his views or observations in the light of what the Governor said at the Alumini meeting, he stated that “it simply goes to confirm my long standing issues with the parallel figures, debt levels and deficit financing.”
He said, “I’ve already spoken about the need for government to move away from the narrow basis for calculating deficit and debts where things like exceptional expenditures amongst others are taken out and pushed to foot notes which tends to hide the actual picture or true state of the fiscal analysis so I think it’s refreshing to hear the Governor mention that they will revert to the broad base calculation.”
“Remember I’ve also mentioned that it was very unusual for the BoG to finance deficit for government. It’s the first time it has happened in nearly forty years. During our (NDC) tenure we had zero deficit financing but the ruling NPP government has already received Gh¢1.7 billion so far, so if the governor says the Central Bank cannot continue to finance government going forward, it shows the unusual nature of that BoG venture,” he recounted
Mr Terkper also pointed out that financing the deficit has got nothing to do with COVID-19 spending as being boxed together sometimes because COVID financing was fully covered.
The former Minister for Finance stated that the Governor in his lecture also warned about what he described as “ breaching unsustainable debt levels which brings the country back to the whole issue of HIPC with the debt to GDP estimated to hit some 77% by close of year 2020.”
“This is going to take a whole lot for us as a country to dig ourselves up again because we can’t access the benefits of HIPC again and therefore the impact is going to be very heavy on debt servicing as we continue to pay so much on interest,” he noted.
Concluding on the outlook of the fiscal year and the way forward, Mr Terkper advised that it will be prudent for Ghana to start moving into austerity mode and try home grown policies or be forced to go to IMF because, “if Moodys and others are talking the way they are talking about the economy of Ghana it means your preference of going to the stock market is going to be tough and then your development partners will start pushing you towards an IMF program before they give you the necessary support.”
