Ghana is today dolling out more to pay interest payments than it spends on infrastructural or capital projects annually, Dr. Mahamudu Bawumia has said.
Speaking during a public lecture on the state of the economy, Dr. Bawumia said while the norm is to have a situation where infrastructure expenditure is far above interest payments, Ghana today was faced with the peculiar situation of paying more in interest payments than what it pays on infrastructural expenditure in the year as a result of the unbridled borrowing the NDC has done in the last eight years.
“The data also shows that during the NPP period of governance, capital expenditure far exceeded interest payments. This is because low interest payments allow room for more capital expenditure. Infrastructure expenditure as a percentage of GDP declined sharply after 2008 as interest payments increased. From 2014 to date, interest payments have now incredibly exceeded infrastructure expenditure.
How can an economy be on an upward growth path when interest payments exceed infrastructure expenditure? This is the result of NDC’s economic mismanagement”, he said.
The NPP Vice-Presidential candidate also indicated that not only is Ghana spending more on interest payments than on infrastructure, but that the nation was also spending more on interest payments than the value of its key agricultural production (Cocoa, livestock, fishing, forestry and logging) – put together.
Debt Suffocating Ghana
Touching on the unprecedented borrowing and the high debt levels Ghana, was saddled with at the moment, interest payments alone in 2015 stood at GHC9.6 billion, more than the total debt of Ghana at the end of 2008.
Dr. Mahamudu Bawumia noted that Ghana’s Debt total had ballooned from GHC9.5billion to GHC105 billion at the end of May 2016.
“The real effects of the reckless borrowing undertaken in the last seven years is seen in the magnitude of interest payments Ghana has been burdened with, which has meant that vital resources which should have gone into vital sectors, infrastructural development and social services, are now being pumped into settling our debt obligations.
“To put the interest payments on the debt in context, we should note that the entire allocations in the 2016 budget to the Ministries of Roads and Highways, Trade and Industry, Food and Agriculture, Water Resources, Works and Housing, Youth and Sports, and Ministry of Transport amounted to a total of GH¢2.1 billion. Interest payments in 2016 (GH¢10.5 billion) would be five times what was allocated to these six key ministries combined. As interest payments go up, the space for development shrinks, and this is all due to financial indiscipline. At the end of 2008, Ghana’s total interest payments amounted to GH¢680 million,” he said.
He further disclosed that interest payments on the debt stock in 2015 was six times Ghana’s oil revenue, adding, “the oil discovery has basically been compromised over the last seven years by the government’s recklessness and incompetence”.