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Ghana: Country's Debt Burden Reduced-Says Kwaku Kwarteng
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Ghanaian Chronicle (Accra)
27 March 2008
Posted to the web 27 March 2008
George Kyei Frimpong
The Government Spokesman on Finance and Economy, Mr. Kwaku Kwarteng, has stated that there is the need to commend the government for being able to reduce the country's debt burden.
According to him, in the year 2000, more than a third of all government expenditure went into debt servicing, adding that, "Taxes collected for development and provision of social services to the people of Ghana rather went to pay debts."
Speaking to The Chronicle, in an interview, Mr. Kwarteng made claims to the effect that the total debt to the Gross Domestic Product (GDP) ratio, had dropped from 189% as at the 2nd quarter of 2000, to 48% at the end of last year.
He noted that by close of December 2000, Ghana's nominal GDP was only US$3.94 billion, stressing, "In simple terms, GDP is the value of all the goods and services produced in a country in a particular year. So, the value of all the goods and services produced in the country in 2000 was US$3.94 billion. However, our total public debt by the close of 2000 was US$7.43 billion, almost twice our GDP. Actually that put our total debt to GDP ratio at 189%."
He continued that it was a terrible situation, and it was only a matter of time before the entire economy collapsed under our debts, but the change of government enabled the economy to be revived.
The Government Spokesman observed that by the close of December 2007, Ghana's nominal GDP had risen to US$14.05 billion, whilst the total public debt had declined marginally to US$7.24 billion, which signified that the total debt to GDP ratio had also dropped significantly to 48%.
He elaborated that what it meant, was that the debt had still dropped though the population had increased, and the economy has as well become bigger.
The feat, he claimed, was as a result of the country's efforts in servicing its debt, and joining the Highly Indebted Poor Countries (HIPC), and the multilateral debt release initiative.
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"Many people are impressed with Ghana's debt management in the last seven years; the international community, Ghanaians abroad, economists, actually, not quite everybody. As for the NDC, they say they have not seen anything. According to Prof Mills and the NDC people, our debt burden has come down, not because of any fantastic debt management policies, but rather because we went HIPC," he emphasized.
He argued that the National Democratic Congress (NDC) had forgotten that going HIPC was an economic policy, which they had the option to join in 1999 or 2000, but they saw no reason to join
He reiterated that, "In fact, when Ghana, under the NPP, decided to go HIPC in 2001, they said it was a 'disastrous initiative' that was going to bring the country no benefit."
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