Finance Minister, Yaw Osafo-Maafo says Ghana, which as at December last year, could not sustain her debt level, pushing the country to adopt the HIPC initiative, can now do so under the NPP-led government.
The Finance Minister’s statement was in reaction to minority’s assertion that the government is compounding the already huge debt burden of the country by contracting more loans.
Mr. Osafo-Maafo in his justification of more loans, said, “What is relevant is the sustainability of the debt and not the volume of the debt. The question is whether the country is able to sustain the debt.”
The country can now sustain its debts having adopted the controversial HIPC initiative He noted that his government has put in place, prudent economic policies to bring the economic back on track.
The minority NDC was of the view that the government having declared the country heavily indebted and poor, blaming it on huge debt, mainly from loans contracted by the previous regime, and its failure to service them (loans), should not continue in like manner. But the Minister explained that the country could now sustain its debt level.
Minority leader, Alban Bagbin in his calculation, challenged by members of the other side (majority) said, the 10-month-old NPP government has already contracted an amount of $800 million, the equivalent of $80 million per month. Giving the impression that NPP’s loans at the end of their term of office would be more than what the previous government of the NDC left.
Answering a question posed by the NDC member for Ho West, Francis Agbotse as to the quantum of the national debt as at the end of December 1981, Mr. Osafo-Maafo said Ghana owed its foreign debtors $5.9 billion as at the end of 2000.
"The external stock of debt stood at 198.48 million at the end of 1981 and by the year 2000, rose to 5.9 billion dollars. This represents a 2,872.6 per cent increase from the 1981 figure.
Mr Osafo-Maafo said in 1982, Ghana contracted loans to the tune of 25.1 million dollars rising to 335.2 million dollars in 1985 and further up to 598 million dollars in 1990.
"This, however, fell sharply to about 291.4 million dollars in 1991 but rose again to 541.8 million dollars in 1992. It went down to about 437.6 million dollars in 1996 and declined further to 206.8 million dollars in 1997."
Though the loans contracted showed a declining trend, 1999 recorded a total of 348.7 million dollars before falling to 68.9 million dollars in 2000.
The Minister who is also MP for Akim Oda attributed the increasing trend in these long tern external loan commitment to the Economic Recovery Programme (ERP) the then government embarked upon in 1983 and the Structural Adjustment Programmes (SAP) that followed in 1987.
"The period under review brought in both programme loans to support the budget and project loans to most sectors, mainly roads, energy, agriculture, health and education."
On medium term loans, he said 18.1 million dollars was contracted in 1982 increasing to 220 million dollars in 1985. It rose again to 321.6 million dollars in 1987 adding that it, however, showed a declining trend after 1987 with 1990 commitments around 164.3 million dollars.
Mr Osafo-Maafo said: "It rose again to 300 million in 1995 and 352.3 million in 1996. For 1997 total loans contracted fell sharply to 95.8 million but went up again in 1999 to about 250.7 million dollars declining again to 50 million dollars in 2000."
Government contracted short-term loans to the tune of 40 million dollars 1995. "The amount rose to 100 million dollars in 1997 but fell to 70 million in 1998 and further down to 40 million dollars for 1999 and 2000.
He said:" The average rate of interest for the period was 6.28 per cent. The main creditors were Union Bank of Switzerland (UBS) and Bank for International Settlement (BIS)."
According to the Finance Minister, debt service payment on long-term and medium-term debt increased over the years from 7 million dollars in 1982 to 123 million dollars in 1987. "It further increased to about 242 million in 1994. It peaked around 454 million dollars in 1998 and declined to about Mr Osafo-Maafo said 4.3 billion dollars representing 73 per cent of the total amount was for project funding adding that 21.5 per cent of these projects were still on going.
