The Minority New Patriotic Party (NPP) in Parliament has warned that Ghana could potentially be on its way back to the Heavily Indebted Poor Country (HIPCI) if the current average borrowing of GH¢1.1BN ($500) a month by the National Democratic Congress (NDC) administration from both domestic and foreign sources is not halted.
According to them, the trend is certainly 'unsustainable and unreasonable', especially when about 63% of the current debt stock comes from domestic sources.
They noted that Ghana's public debt rose from GH¢9.5 billion in January 2009 to a staggering GH¢43.9 billion at the end of August 27, 2013, adding that between January and August this year (2013), the government borrowed GH¢8.8 billion.
Addressing a news conference in Accra yesterday, the Minority Spokesperson on Finance in Parliament, Dr. Anthony Akoto Osei said "it also needs to be pointed out that this 49.5% debt ratio means the country is on the verge of crossing the 50% threshold."
Dr. Akoto Osei warned that should Ghana cross the 50% threshold of borrowing, its credit rating would be downgraded and the B+ rating bequeathed on the current administration by the Kufuor regime, would be lost. This could also result in Ghana borrowing at very high interest rates.
Efforts made by the editorial team to get the Finance Minister, Mr. Seth Terkper, to comment on the allegation proved futile. The Minister of State in charge of Financial and Allied Institutions at the presidency, Mr. Fifi Kwetey has, however, argued persistently that all the loans the government had contracted has been used for infrastructural projects and that the money has not been misused as the opposition party was trying to tell the international community.
Statutory accounts in arrears
The Minority, however, thinks it is "unprecedented", the inability of government to pay statutory funds since the beginning of 2013.
Dr. Akoto Osei stressed that even though government had introduced new taxes, such as condom tax, petroleum tax and communications service tax, which have all been collected, it has not as required by law put some portions of these taxes into specific accounts to pay for specific services to tax payers.
Some of these accounts include the District Assembly Common Fund (DAFC), the National Health Insurance Fund (NHIF), Ghana Education Trust Fund (GETFund) and Road Fund, just to mention a few.
Touching on the state of these accounts, he said DAFC, which is being used by district assemblies to provide social services to the people is in arrears of GH¢652 million, NHIS GH¢350 million and Road Fund GH¢400 million, among others.
Furthermore, district assemblies cannot afford to pay their utility bills, saying "in Kumasi, the ECG recently cut off power to Kumasi Metropolitan Assembly (KMA) for non-payment of its bills. Even money to buy A4 sheets to run their offices is not available".
Akoto Osei also alleged that about two weeks ago, several government cheques bounced at the local government level because the accounts on which the cheques were to be drawn had been quietly closed upon the instructions of government.
"Most development and local government initiatives have come to a standstill because government has not transferred the needed resources to the local level. This is a serious problem. In the past, we all complained when these funds delayed for a month or two. What is happening now has never happened before in these proportions.
"It is unprecedented and unbelievable that a month to the presentation of the next budget statement, government has collected taxes but has not paid a pesewa into the district assembly common fund. This is crisis!"
Eurobond money not serving its purpose
The Member of Parliament for Tafo Pankrono hinted that the second sovereign bond (Eurobond) of $1 billion borrowed from the international capital market to bridge the country's infrastructural deficit and refinance its debts, was not used for that purpose.
"When government took the Eurobond recently, we were told that part of the money would be used to settle contractors government owed. Ghana has received all the Eurobond money alright, but to date, the promised payments to contractors have not happened", he said.
This he argued, has contributed to a fall in businesses, corporate and income tax revenues, caused people their jobs and at large, affected the livelihoods of people and the economy adversely.
"So with all the oil revenues which previous governments did not have, with all the many loans contracted, with all the donor grants, with all the Eurobond money, with the CDB loan disbursed, and with all the tax hikes, the Mahama government cannot make statutory payments", he queried.