Gov’t has no excuse for plunging Ghanaians into debt distress

Senior finance lecturer at the University of Cape Coast, Seyram Kawor, has cautioned government to take responsibility for plunging the country into debt distress.

According to him, government has made some poor decisions pertaining to running the economy. Among other things, he indicated that government has failed to promote the tourism sector until now, and there are lot of monies that have been spent recklessly without accounting for them.

“Government has no excuse for plunging us into debt distress. We have not enhanced our corporate governance system, there’s no transparency and accountability that will ensure that monies that are borrowed are properly used efficiently and effectively in our country. So, we also do not mobilize enough domestic revenue in order to augment the borrowings that we have done…” Seyram Kawor said.

Mr. Kawor stated that similarly, contracts in Ghana are overpriced and once that happens, because the loans contracted are dollar denominated loans, when the currency depreciates, the loans or debts also go up.

Commenting on the report by AfDB which ranked Ghana 6th in West Africa due to its external debt to GDP, and also the only country in debt distress, Mr Kawor noted that it is high time government works towards reviving the economy.

Furthermore, Mr Kawor stated that the report equally exposes the fact that there’s a lot of work for government to do as a country.

“We have touted ourselves as the gateway of Africa and one of the countries with good policies and implementations. But being 6th in Africa in terms of debt to GDP ratio and having the average of more than 29.5% of that of West Africa tell us that there is a lot of work for our political leaders to do, in terms of raising revenue. The use of our natural resources to the benefit of Ghana – if we have Niger that has a coup and their debt to GDP is better than Ghana, it’s a sad story that our leaders need to sit down, re-strategize and ensure that the resources we have at our disposal and any amount of money that we try to borrow, we use it to the benefit of the Ghanaian population” he added.

Government’s accumulation of debt

With respect to coup riddled nations like Niger not in debt distress zone despite state of economy, Mr Kawor noted that such countries are trying to control government expenditure, with proper institution for fiscal controls.

Additionally, he highlighted that these countries also try to avoid the accumulation of more debt, avoid dependence on single sector economy such as gold or oil and are looking out for other areas of their countries they can focus on.

“If you look at Niger, they are not only looking at lithium which gives them a lot of export income but are looking at agriculture and diversification into other areas. They promote a lot of export and try to negotiate better when it comes to debt. The interest rates that these countries pay on their debt is much lower than that of Ghana. They put in the measures in terms of debt restructuring when there’s an issue and try to collect more taxes from their own citizens.”

Moreover, Mr Kawor highlighted that these countries have a lot of foreign grants that go to them. Citing Niger, he stated that countries such as Russia, France and US give them better deals.

“So, these things, help out a lot, and they have investments in productive sectors of the economy. Niger gives us onions and some other items, so when they have those crisis and borders are closed, we have a lot of issues in our country where prices will have to go up…” Seyram Kawor further indicated.

In light of this, Mr Kawor expressed that if these countries are doing it and are not facing internal crisis, Ghana as a country must equally consider such options. He emphasized that once government initiates that, it will have no justification whatsoever for fault-finding.