Director of Research at the African Center for Economic Transformation (ACET), Dr. Joe Amoako-Tuffour, has slammed the outgone Finance Minister, Seth Terkper, for ostensibly playing a “Ponzi game” with his management of the economy. In a scathing assessment of the economy left by the outgone National Democratic Congress government, he said Ghana currently lay in conditions ripe for a debt crisis to emerge.
Dr. Amoako-Tuffour, in a letter penned to the nominated Finance Minister, Ken Ofori Atta under the newly elected New Patriotic Party government described the economy left to the new government as “slow moving, indebted and jobless”. This is despite Mr. Terkper consistently reiterating that his government left behind a stabilized economy for the current administration.
Ghana’s debt stock lies at GHc 110 billion, as at August 2016, having risen to as high as GHc 112.4 billion under the previous government. The country’s debt to GDP ratio also stands at about 71 percent, according to Mr. Terkper. About GHc61 billion of the debt comes from external borrowing whiles GHc49.2 billion is from domestic borrowing.
In defence of the debt accrued by his government, the immediate past Finance Minster has argued that all nations borrow for major capital or infrastructure development hence the previous government’s focus on “smart-borrowing” to sustain growth and development so as to avoid unduly increasing public debt. Ability to borrow not good management Dr. Amoako-Tuffour, however, believes this “smart borrowing” may have left the Ghanaian economy on the brink instead of providing the needed easement for the economy.
“I must admit that while Ghana has not yet faced a debt crisis of the likes of the PIGS of recent vintage (Portugal, Italy, Greece and Spain), Ghana has built up all the conditions and vulnerabilities for a crisis to emerge.” He noted further that the the remedy for the economy “lies not in high spirits accounting, “smart borrowing” nor in Ponzi games, but in sound management and policy prudence for a higher public purpose.
The ability to borrow should never be mistaken as a sign of good management.” Dr. Amoako-Tuffour thus suggested that the sound management of the economy could be achieved by accelerating economic growth, increasing revenue mobilization and prudent spending. He elaborates on these points in the letter which can be viewed here.
Dr. Amoako-Tuffour explained in his letter that substantial growth in national output “no doubt will reduce the debt burden and provide additional resources through tax revenues; better if that growth creates jobs.”
He also noted that the forecasted economic growth for Ghana would likely not exceed 5-7 percent thus attention must be paid to prudent spending and revenue management “The bulk of the needed adjustments rests on revenue and spending management; not just for the sake of better public sector management, but to provide the enabling environment for private enterprise growth,” the economist stated.
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