GHS 50.1bn expenditure on Covid, energy, banking sectors the cause of high debt stock – Bawumia
Vice President Dr Mahamudu Bawumia has assigned reasons for the increment in the country’s debt stock from GHS 123bn in 2016 to GHS 355bn in 2021.
Giving a lecture on the State of the Economy at the Tescon National Conference on Thursday, April 7, 2022, the Vice President noted the increment of the country’s debt stock to 80% of GDP is the result of huge expenditure made on the Covid pandemic, energy sector and the banking sector clean up.
According to him, total expenses made on the Covid pandemic by government, the pay-or-take contracts in the energy sector, and the banking sector clean up amounted to some GHS 50.1bn.
The Vice President making the above assertions noted that spending on the aforementioned expenditure items contributed to the gargantuan growth in the country’s debt to stock to 80% of GDP.
Further asserting that, had it not been the huge expenses made to fight the pandemic, pay or take contracts in the energy sector and the banking sector clean up, Ghana’s debt to GDP as at end-2021 would have been 68% and not the current 80.1%.
Speaking further at the Conference, the Vice President averred interest payments made on loans to fight the pandemic, pay for the take-or-pay contracts in the energy sector and pay for deposits of customers in the banking sector clean up exercise amounts to GHS 8.5bn, 23% of Ghana’s GHS 37bn annual interest payments on loans.
Addressing concerns raised by several economists on the government’s flagship programmes contributing to the rising public debt and hence the need for government to suspend its financing of flagship programmes, Dr Bawumia stated that total expenditure incurred by government in supporting flagship programmes for the past five (5) years amounts to GHS 15bn, hence cannot be the main driver of the public debt stock.
“Data shows that over 5 years, our expenditure on flagship programmes was GHS 15.6bn, and comparing that to the three items earlier stated, it can be seen that it is three times more than monies spent on flagship programmes, and hence cannot be the cause of the high debt” he stated.
