By A. Kapini Atafori
An economic justice advocate has called on Ghana’s Members of Parliament (MPs) to examine loans contracted by the government with the national interest in mind in order to ensure that debt-funded projects are independently evaluated before, during and after implementation.
According to Mr. Bernard Anaba, an economic justice policy analyst with the Integrated Social Development Centre (ISODEC), that recommendation would ensure that the country gets “value for money” in its domestic and external borrowings.
Mr Anaba made the call at a roundtable on the topic ‘Ghana’s Debt Sustainability Assessment Focusing on Trends in the Recent Evolution of Debt Indicators and Present Policy Options at the National Level.’
The roundtable was organized by Economic Governance Platform (EGP) in Accra on 2nd November, 2021 with the support of Oxfam. It was chaired by Dr. Vera Fiador, a senior lecturer at the University of Ghana Business School (UGBS) and the Chief Executive Officer of Madeolo Consult.
Mr. Anaba said “Parliament should scrutinize and approve loans and projects with the national interest,” recommending further that there is the need for a new form of debt accountability by both lenders and borrowers.
He pointed out that Ghana’s “debts have been increasing rapidly” but the country requires a growth of 3.5% to achieve debt sustainability in 2021. “The rate of the growth of debt is tracking down but the overall growth is not enough to match the rate of debt growth,” he noted.
He explicated that the International Monetary Fund’s (IMF) Debt Sustainability Index (DSI) is the measure of how much Gross Domestic Product (GDP) growth is required to make a country debt sustainable. He said according to IMF’s Article IV Report, Ghana’s public debt rose to 79% of GDP, while the current deficit was slightly to 3.1% of GDP.
He said the IMF has projected that the country would attain 84.3% debt in 2022, adding “a gradual medium-term fiscal adjustment which would support a decline in public debt starting 2024.”
He asserted that at the current level, Ghana must increase its annual GDP growth by about 3.4% yearly to be able to return to debt sustainability. He observed that “it was almost impossible” to attain the forecasted 4.5% growth.
He stated that “For Ghana, the increasing resort to domestic financing as a means of debt diversification may have its advantages and without the problem associated with debt resolutions, but where the government becomes the cause of debt default, the ramifications to the economy can be huge compared to external debt default.”
He added that: “If the government defaults to the banks, then we will be in a serious situation … It means we shouldn’t get to the situation where the government defaults.”
Mr. Anaba also suggested that the state-owned enterprises (SOEs) should undertake annual public disclosures of their financial and corporate reporting in line with good corporate practices.
He said: “The DSF indicators are forward-looking as compared to the more static indicators of HIPC. The DSF is not country specific as compared to HIPC indicators. They include risk scenario analysis where shocks tests are conducted under defined thresholds over the span of five years.”
The mission of EGP exists to ensure that civil society organizations (CSOs) and the media work on transparency and accountability issues in Ghana, and come out with common stands on economic governance issues through policy analysis, constructive engagement with government, its agencies and development partners in a bid to achieve maximum advocacy results.
The EGP is made up of CSOs engaged in fiscal transparency, accountability, anti-corruption and social development. The Platform’s current membership includes the Financial Accountability & Transparency-Africa, IMANI Center for Policy & Education, Africa Centre for Energy Policy, Penplusbytes, Ghana Integrity Initiative, Ghana Anti-Corruption Coalition, Ghana Center for Democratic Development, SEND Ghana, ISODEC, Occupy Ghana, African Centre for Parliamentary Affairs, Centre for Policy Analysis and the Institute for Fiscal Studies.
