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Business News of Friday, 9 September 2016


63% debt to GDP figure erroneous – Bawumia

A former Deputy Governor of the Bank of Ghana, Dr. Mahamudu Bawumia has questioned government’s 63% debt to GDP figure quoted as at the end of May this year.

He describes as misleading, the calculation by which the said figure was arrived at.

“The calculation of the GDP ratio used by the Minister is plain wrong and misleading. The government has taken the debt stock in May 2016 and divided it by the projected GDP in December 2016 to arrive at the debt to GDP ratio of 63 percent,” Dr. Bawumia stated.

Finance Minister Seth Terkper in his mid-year review and supplementary budget presentation, announced a reduction in the debt to GDP ratio from 72 to 63 percent from end of 2015 to the end of May this year.

“We are proud to note that, for the first time since the declaration of HIPC in 2001 we were able to first, slow down the rate of growth of debt accumulation between 2014 and 2015; and, second, now reverse course, with the debt-to-GDP ratio falling from 72 percent of GDP at end-2015 to 63 percent at end-May 2016.”

But speaking at a lecture on the topic, ‘The State of the Ghanaian Economy – A Foundation of Concrete or Straw’, Dr. Bawumia believes the country’s rising debts which he sets to increase to 42 billion dollars by the end of this year, will not warrant such figures quoted by government.

“This government has borrowed some 39 billion dollars in eight years [2009 and 2016]… in fact by December 2016, the government would have borrowed by 42 billion dollars. But they will [as expected] claim they have borrowed 26 billion dollars. This is because we are applying the current exchange rate which the same government succeeded in collapsing,” he stressed.