Ghana not preparing for the next crisis – Seth Terkper
Former Minister for Finance, Seth Terkper, says government is not making enough preparation to be able to effectively handle another global (external) or internal economic crisis.
According to the former Finance Minister, inadequate preparation towards the next economic crisis is evidenced by government’s collateralisation of almost all revenue sources coupled with the discontinuation of mechanisms such as the Sinking Fund, Stabilisation Fund and others which serve as buffers and cushion the economy in times of crisis.
Making the assertion at the inaugural launch of economic policy think tank, Think Progress Ghana, Mr Terkper noted that government’s unpreparedness towards a crisis resulted in the country taking on more loans which further deepened the country’s public debt burden.
“We are not preparing for the next crisis, just like we didn’t prepare for the Covid pandemic, we also didn’t prepare for the Russia-Ukraine war.
“And this is because, government has discontinued mechanisms such as the Sinking Fund and stabilisation Fund by not putting monies in there as required by the PRMA Act as well as collateralised revenue sources that could have helped as to adequately withstand the Covid,” he remarked.
Mr Terkper is of the view that, with production from three oil fields, the incumbent government should have been able to have enough buffers to withstand any crisis that the country is currently facing or might face in the near future.
According to the Finance Minister, Ken Ofori-Atta, Ghana, in the wake of the Covid pandemic, borrowed in excess of GHS 19bn from multilateral partners such as the African Development Bank, IMF and World Bank.
Loans taken from these multilateral institutions as well as other development partners have further deepened the country’s debt stock which currently stands at 78% of GDP making the country at risk of high debt-distress.
Given the country’s high debt and low domestic revenue mobilisation, it is indeed a matter of fact that government in the next possible economic crisis will find it difficult to withstand let alone overcome the crisis without once again resorting to borrowing which will further deepen the country’s public debt and possibly result in a debt crisis.
