The Running Mate to Nana Akufo-Addo for the 2016 Presidential election, Dr Mahamudu Bawumia says the Mahama-led administration has borrowed about GHC66.6 billion in the last six years, despite proceeds from gold and cocoa shooting up significantly within the same period while the government also had access to oil revenue, an advantage no government ever had.

“It should be noted that the fiscal deficits as a percentage of GDP in the last three years (at 9.5%, 10.9% and 12% of GDP) have exceeded the 8.6% deficit in 2000 that sent the economy into a tailspin,” he said.

Delivering a speech on the topic: “The IMF Bailout, Will the Anchor Hold” at the Central University College Tuesday, Dr. Bawumia said: “Probably the most significant contributor to Ghana’s current economic malaise is the ballooning and unsustainable public debt less than a decade after being granted HIPC debt relief to the tune of $4.2 billion.

“The debt relief obtained under HIPC and the accompanying fiscal policy stance resulted in a significant reduction of the debt burden. By the end of 2008, Ghana’s total public debt stood at GH¢9.5 billion (33% of GDP). In the last six years however, the stock of public debt has seen a dramatic increase to GH¢76.1 billion (67.1% of GDP) at the end of 2014. This is an increase in the stock of debt by 700% (GH¢66.6billion) over a six-year period and it represents an average increase in the stock of debt by 116% a year.

“The interest burden of this high public debt stock has proven to be extremely high. In 2015, interest payments alone on the debt would amount to GHC9.57 billion. Interest payments have increased from GHC 679 million in 2008 to a projected GHC9.57billion in 2015 (an increase of 14 fold). Ghana’s total debt in 2008 was GHC9.5 billion but interest payments in 2015 alone would amount to GHC9.5 billion,” he added.

Dr. Bawumia explained that these high interest payments occasioned by the astronomic accumulation of debt within the last six years means that money which could have been spent on critical areas were sunk into servicing the debts.

“The picture becomes clearer when one compares the amount spent on interest payments to allocations to various Ministries as spelt out in the 2015 Budget.

“The total sum allocated to these 8 key ministries - Education; Food & Agriculture, Water Resources, Works & Housing; Transport; Roads & Highways; Trade & Industry; Fisheries; and Health - from the budget…amounted to GHC952 million. Interest payment on Ghana’s public debt stock in 2015 would amount GHC9.5 billion, i.e. 10 times the combined allocation of these eight critical ministries. This situation is in fact reminiscent of Ghana in the run up to HIPC where the debt burden had taken away critical resources that could have enhanced capital and social expenditure,” he said.

The former Deputy Governor of the Bank of Ghana also said the loose monetary policy of the Bank of Ghana is one of the factors that had led the economy into the abyss.

“There has been a dramatic increase in central bank financing of government recently (i.e. equivalent to the printing of money), in addition to borrowing to finance the fiscal deficit.

“Central bank financing (net claims on government) has increased from GH¢1.45 billion in 2008 to GH¢13.95 billion by 2014, an 863% increase.

“The excess printing of money to finance the fiscal deficit causes inflation. In accommodating Government in this manner, the Bank of Ghana is by itself undermining the value of the currency that it is required by law to protect,” he said.

Dr. Bawumia cited the declining growth of the Ghanaian economy, as another factor underlining the crisis the economy finds itself in.

“The 2015 budget shows an economy in decline. Real GDP growth has declined from 15% in 2011 (with the onset of oil production to a projected 3.5% in 2015 (including oil). The decline in economic growth is reflected across all sectors (Agriculture, Industry and Services).

“The 2015 budget is projecting non-oil growth of 2.7% in 2015. These facts are as revealing as they are disturbing. The growth rate in 2015 would be just about what it was in the year 2000 and half the rate of the 8.4% achieved in 2008 without oil! Non-oil growth in 2015 will be below the growth rates attained in 2000.”