We might have over-borrowed – Deputy finance minister

Deputy Finance Minister, Dr John Kumah, has said that the current hardship in the country might be because the government over-relied on borrowing to run the economy.

According to him, the government could have considered other alternatives to financing its projects and programmes aside from borrowing.

“Maybe the levels of borrowing have been too much and that could be one of the areas. Maybe we should have looked at more alternatives for financing our various programmes but of course, every nation is built on debt, it is what you do with it and what happens [that matters],” myjoyonline.com reports.

John Kumah, who is also the Member of Parliament for Ejisu, however, indicated that but for the COVID-19 pandemic, Ghanaians could have seen the full benefits of all the monies the government borrowed.

“I know we are where we are because, if you borrowed in 2017, 2018 and 2019, $3 billion of investment each year and you were expecting the returns after 2020 and Covid-19 struck, and brought your economy to almost zero, it means that you are already in a very difficult situation.

“So, this is the reality of what happened, it’s not like we borrowed and did things that didn’t benefit the country,” he is quoted to have said on Joy FM’s Super Morning Show.

Meanwhile, the Minister of Finance, Ken Ofori-Atta, has announced a number of measures under the government’s Domestic Debt Exchange (DDE) programme.

He stated in a 4-minute address on Sunday, December 4, that the announcement was in line with the government’s Debt Sustainability Analysis as contained in the 2023 budget he presented to Parliament on November 24.

The minister laid out, among other things, the exchange of existing domestic bonds with four new ones, as well as their maturity dates and terms of coupon payments.

He also addressed the overarching goal of the government relative to its engagements with the International Monetary Fund as well as measures to minimize the impact of domestic bond exchange on different stakeholders.

“The Government of Ghana has been working hard to minimize the impact of the domestic debt exchange on investors holding government bonds, particularly small investors, individuals, and other vulnerable groups,” he said, before outlining three main measures:

• Treasury Bills are completely exempted and all holders will be paid the full value of their investments on maturity.

• There will be NO haircut on the principal of bonds.

• Individual holders of bonds will not be affected.