Vice President Dr Mahamudu Bawumia has said despite the rising public debt level, prudent management of the economy has meant key indicators remain favourable.
He said inflation and exchange rates have gone down due to prudent management of the economy.
“I want to let you think about one thing; you hear the NDC saying, the debt level has gone up. Sure, the debt level has gone up, but economic levels have not gone down. The debt level has increased yes, but why do we want to maintain prudent debt level? When you teach economics, you have to ask your students that question; why is it that we want the debt levels maintained at prudent levels?
“The reason is that if you do not manage your debt levels properly, it will affect your exchange rate, it will affect your interest rate, it will affect your inflation and it will affect your growth. You’re managing the economy in a way to look at its impact on these variables; exchange rate, interest rate, inflation and growth rate. That is the issue.
“When the NDC was in government, well way before, they took us to HIPC. They had mismanaged the debt levels such that we had very high inflation, very high exchange rate depreciation, very high interest rate and low growth. That was the legacy they left us,†he said.
He made the remarks at a TESCON conference in Cape Coast on Saturday August 7, 2021.
He said towards 2016 under the NDC, the debt levels had increased such that inflation, interest rate, exchange rate depreciation were all rising but growth was declining forcing the John Mahama administration to run to the IMF for a bailout.
Wasn’t that the case? That was NDC economic management. Our debt levels have gone up, but what has happened to inflation? It has come down. What has happened to exchange rate depreciation? Depreciation has come down. What has happened to interest rate? It has come down. What has happened to growth? It is going up,†he touted.
But in a rebuttal, a former Deputy Minister of Communications, Felix Kwakye Ofosu, disagreed with the Vice President’s claims of prudent economic management under Nana Akufo-Addo.
“The record is that President Akufo-Addo has increased our debt stock from GH¢120 billion to GH¢291 billion representing some 76% of debt to GDP. He chose conveniently to blame COVID-19 for the poor performance of the economy, and yet he is seeking to recover from COVID-19,†Mr Kwakye said in a Facebook post.
He added: “According to Mahamadu Bawumia, a public debt of GH¢334 billion in 2021 representing 78.9% debt to GDP ratio which has led to the use of 92% of tax revenue to pay interests and amortisation on it alone, shows prudent borrowing but a public debt of GHS 120 billion, with debt to GDP ratio of 56% which leads to the use of 28% of revenue to service it in 2016 shows non-prudent borrowing. He clearly didn’t have respect for the audience he addressed...â€