Wednesday, 07 June

Economy showed signs of challenges before Covid | NDC says reckless spending, excessive borrowing cause of economic mess

Aseidu Nketia

The main opposition National Democratic Congress (NDC) has said contrary to claims by the government that the recent economic crisis is as a result of Covid-19 pandemic and Russia-Ukraine war, the facts show that the economy showed signs of serious challenges even before COVID-19 struck.

According to the NDC, way before the first case of COVID-19 was recorded in Ghana in March 2020, the public debt had increased from GHS120 billion in 2016 to GHS225 billion in 2019, representing an increase of GHS105 billion in the country’s debt stock.

The NDC said Ghana’s Debt to GDP ratio had increased from 56% in 2016 to about 70% in 2019 including the ESLA, Daakye and other hidden debts.

Before COVID-19, the main opposition noted that the debt servicing amount had increased from GHS11 billion in 2016 to GHS37 billion in 2019 and constituted 91% of tax revenue.

“Also, the budget deficit had exceeded the legally acceptable threshold of 5% and had hit 7.5% in 2018 and 7% in 2019,” the party stated.

“Again, before COVID-19, the Ghana Cedi in 2019 was plummeting in double digits leading to the setting up of a 40-member Committee by the government to investigate the causes of the alarming depreciation of the national currency,” Mr Johnson Asiedu Nketia, Chairman of the NDC added in the party’s True State of the Nations Address delivered at the UPSA Auditorium in Accra on Monday, 20 March 2023.

Mr Nketia said far from being the cause of Ghana’s economic collapse, COVID-19 brought the Akufo-Addo/Bawumia government an unprecedented windfall of about GHS30 billion to manage and mitigate the impact of the pandemic.

“Unfortunately, this was largely wasted on election-related expenses. This amount excludes proceeds from the obnoxious COVID-19 levy which Ghanaians continue to pay till date,” he stated.

Mr Nketia continued that the coronavirus pandemic affected all countries in the world, including Ghana’s neighbours Benin, Togo, Côte D’Ivoire, Burkina Faso and Nigeria, but whereas these countries managed their resources prudently, thereby recording deficits below 8% and Debt to GDP ratios of below 65%, the Akufo-Addo/Bawumia government borrowed excessively and spent recklessly for election-purposes thereby recording a disastrous deficit of 15.7% and a Debt to GDP ratio of about 80% in 2020.

Mr Nketia indicated that in the year 2020 when COVID was at its peak, all of Ghana’s neighbours recorded a budget deficit of less than 8%: Burkina Faso recorded a deficit of 5.7%; Côte D’Ivoire recorded a deficit of 5.6%; Nigeria recorded a deficit of 5.8% and Senegal recorded a deficit of 6.4%, but Ghana alone recorded a deficit of 15.7% because of the reckless election-driven expenses and wastage the Akufo-Addo/Bawumia NPP government engaged in.

“Did COVID-19 affect Ghana any more than it did our neighbours? How come none of these countries who were all affected by the pandemic are recording double digit deficits and high debt to GDP ratio of over 100%? How come none of these countries are recording inflation rates of over 50% like Ghana? How come none of them has defaulted on their debt repayments?” Mr Nketia quizzed.

He asked further “How come none of them has been downgraded to junk status and have been locked out of the international capital market? How come none of these countries are going through a domestic debt restructuring?

“How come none of these countries are visiting cruel financial haircuts on their citizens including pensioners? How come none of these countries are experiencing childhood vaccine shortages?”

Mr Nketia held that the truth of the matter is, Ghana’s economic mess has largely been brought about by “the reckless spending, excessive borrowing and crass economic mismanagement by the Bawumia-led Economic Management Team and not any external factors as government will have us believe.”


Source: Mensah