Politics

Borrowing Is Good If … -Adu Boahen

By admin

Posted on May 14, 2018

5 min read

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<strong>Former President John Dramani Mahama has ridiculed President Akufo-Addo, accusing him of running an “auto-pilot” government, therefore making it seem like there is no one in </strong>charge of the country. “It’s like every minister in this government has his own kingdom, and it’s like the government is on autopilot; there doesn’t seem to be somebody in charge, and, so, any minister gets up and says anything,” he said. The former President who was addressing some former Metropolitan, Municipal and District Chief Executives who served under him in Accra over the weekend said the government was fond of deferring dates for the implementation and actualization of its policy programmes. <strong>“Or One District-One Factory is ready to start. Fifty-seven factories by end of 2017. Then somebody comes and says: ‘Oh, we’re getting the money from here but the rate was not acceptable, so, we are going to look for money from somewhere</strong>,” he said. “One Million Dollars Per Constituency; and what I find strange is they don’t add the per year. It was not one million per constituency, it was one million dollars per constituency per year, that’s 275 million dollars a year. Now even the first one million dollars per constituency is nowhere to be found. Ashanti Regional Minister says it’s been disbursed, somebody, too, says it’s coming” Mahama added. He said the level of confusion in the government is a testimony that Akufo Addo is failing, adding that government is finding it difficult to implement its overly ambitious campaign promises. This is not the first time the former president has unleashed a verbal attack on President Akufo-Addo and his government. In April 2018, John Mahama described the Akufo-Addo government as super-incompetent over its inability to resolve the country’s challenges. “You do not win an election on the weakness of your opponent. You win an election because the electorate have confidence in you. And so even though NPP is proving super incompetent, we cannot sit and relax and say because they are super incompetent we are going to win the next election so we are going to work hard to win,” John Mahama said while addressing members of the NDC in Wa in the Upper West region.

The Deputy Finance Minister Charles Adu Boahen has said borrowing and debt could be good for Ghana as long as the money is not used to finance existing debts.

According to him, borrowing is good as long as it is used for investment.

Speaking on the Citi Breakfast Show, he stated that countries that borrow to invest in capital expenditure, which eventually generates commercial returns, benefit from the borrowing.

“It is funny how Ghanaians seem to be allergic to borrowing. As a banker I have always been of the opinion that borrowing is good, so long as it used for investment when you start borrowing to pay recurrent expenditure,” he said.

The deputy finance minister stated that if the government is to limit itself to the revenue it generates, the country will not be able to grow because the revenue generated will only be used to cover the country’s expenditure.

He also mentioned that most countries that have been able to sustain their growth run on a manageable deficit, which can be covered by the country’s cash flow.

Charles Adu Boahene explained that borrowing only becomes a problem for a country if the country’s debt starts becoming unsustainable.

“Most countries that are growing run a deficit. The question is how much? A small deficit which you can cover with your cash flow is fine, but when you start running a deficit which is 10% and yours is constantly piling up, then you run the risk of getting into a situation where you have debt unsustainability then you begin to start borrowing just to pay your debt or pay interest on your debt, then you know it is time to call in the Doctor,” he said.

The Vice President, Dr Bawumia, while speaking at the closing ceremony of the two-day National Policy Summit on Trade and Industry last year August, said Ghana would continue to borrow responsibly in order to grow Ghana’s economy.

But when Dr Bawumia and his party NPP were in opposition, they criticised the Mahama government of having a voracious appetite for foreign loans which they claimed catapulted the country’s debt stock to unsustainable levels.

In defence of the NPP government’s borrowing, the Veep last year maintained that the debt stock is rather going down due to restructuring.

“Last year the deficit was 9.4 percent of GDP that was where it ended. Thanks to the Asempa Budget it has gone back on a path of fiscal consolidation to bring back the deficit this year to 6.5 percent of GDP,” he said.

Some economists have described the NPP government’s debt management strategy within the first year of its administration as unsuccessful.

In their view, the government has not done much to address the country’s debt, which has left the country in a..

The comments follow the latest figures released by the Bank of Ghana (BoG) after its Monetary Policy Committee (MPC) meeting show that Ghana’s public debt reached 142.5 billion cedis as at December 2017, representing 69.8 percent of GDP.