According to him, before the onset of Covid-19, the economy was already crumbled due to the excessive budget deficit and a choking debt overhang incurred by the government thus making it difficult to run the country.
“The truth is that the Ghanaian economy is in shambles at the moment and all the efforts that they’ve made over the last three to four years to address the concerns of the economy have failed to yield dividends,” he said n TV3‘s New Day on Tuesday, July 27.
“Today we have two biggest problems being the budget deficit, which has been the largest in the history of the Fourth Republic and a choking debt overhang that is making it impossible for government to have adequate finances to run the country.”
He added that because deficits were not used for their intended purposes, generated revenues had been channelled into servicing debt.
“The reason why the debt and deficit are an issue is that because of the deficit that they ran which was due to render expenditure in an election year and had nothing to do with Covid, they are having to borrow to finance it to clear the gap. Because they’re having to borrow, they’ve borrowed to an extent where there is the need to service that debt and for that reason significant amount of revenue generated are used to service the debt.”
Mr Kwakye Ofosu said the government’s inability to finance basic projects to support its citizens is because a larger part of generated revenues are used to pay debt, thus imposing excruciating economic hardship on the people.
“Indeed if you read the 2021 budget presented by Hon. Kyei-Mensa-Bonsu, he makes the point that government intended to collect revenue of GH¢72 billion this year.
“However, GH¢35 billion of that revenue is going to be used to pay interest alone. GH¢35 billion almost half of that revenue is going to be used to pay interest alone, indeed the figures show that as of last year, they used 87% of tax revenue for debt servicing which is interest payment and amortization. Amortization is paying the debt that you actually owe. Now this is creating severe cash shot for government and for that reason they are unable to meet other commitments. It is for that reason that for almost one and half years,\ they owe fertilizer suppliers to the tune of GH¢780 million, they owe contractors billions of Ghana Cedis that they are unable to meet, they owe BDC monies that they are unable to pay and this is having a deleterious effect on basic leverages.”
Mr Kwakye Ofosu asks why the NPP government cannot do the thing other African countries did to keep their deficits within manageable limits
By Berlinda Wowornyo|3news.com|Ghana
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