Prime News Ghana

Finance Minister cites South Africa, UK debt situations to justify Ghana’s debt-to-GDP spike

By George Nyavor
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Finance Minister, Ken Ofori-Atta, has moved to dispel criticisms that Ghana’s rising debt stock is the result of poor management of the economy, citing South Africa, United Kingdom, Rwanda and Zambia as experiencing similar pandemic-induced debt challenges.

Speaking at a press conference on Sunday, May 9, 2021, in response to the raging #Fixthecountry campaign on social media, the Minister said the coronavirus pandemic brought an unprecedented economic contraction as the country battled a “severe health crisis.”

“The outbreak and the ensuing partial lockdown to contain the spread of the virus and protect lives brought socio-economic activities to a virtual halt, with the resultant loss of jobs, incomes, the collapse of businesses and loss of Government revenues.  

“The decisive and unparalleled measures we took to protect Ghanaians have come at a cost, as seen in the sudden relapse in the debt situation from 62.4% in 2019 to 76.1% in 2020,” he said.

Last week, new taxes and an increase in prices of petroleum products at the pumps prompted the #Fixthecountry campaign to get the government to ease the suffering of the Ghanaians.

Pro-#Fixthecountry campaigners say corruption and poor governance is plunging major sectors of the country – like the economy, education and health – deeper into disarray. Others cite poor roads, the erratic power supply (dumsor) and lack of jobs.

READ ALSO: Govt’s 2nd qtr domestic debt plans face challenges

Before the campaign started last week, the Finance Ministry had been blamed for unjustifiable borrowing after it emerged that Ghana’s debt-to-GDP ratio had crossed the dreaded 70% mark.

Analysts say a country risks becoming debt distressed when its debt-to-GDP ratio exceeds 70%.

However, addressing the country on May 9, the day a street protest had been planned as part of the #Fixthecountry campaign, the Finance Minister said similar sudden rises in debt burdens have hit countries around the world since the pandemic hit.

He cited the debt situation in the following countries over the same period as indicative of global economic crisis caused by the pandemic:

  • South Africa: 62.2% in 2019 to 82.6% in 2020
  • Rwanda: 50,7% in 2019 to 61.6% 2020
  • The United Kingdom (UK): 85.4% in 2019 - 100.9% in 2020.

“In extraordinary times, you should expect exceptional leadership from your Government. I truly believe we cannot ensure exceptional leadership without a collective effort. So, I commend the Youth for calling on Government and leaders to be at their best. This shows the patriotism of the Ghanaian Youth, echoing the President’s call to Be a Citizen, Not a Spectator,” Mr Ofori-Atta said.

He said until Ghana was hit by the COVID-19 pandemic in March 2020, the country was on course to achieving the objective to stabilise and grow the economy, create jobs especially for the Youth, modernise, digitise and formalise the economy, provide social protection for the vulnerable and create a safe and secure environment for citizens and businesses to thrive.