-79% Contracted under Mahama

Nana Yaw Dwamena

With Ghana's total Eurobond debt now standing at $3.50 billion, the country alone owes over 10 per cent of the $35 billion owned by African countries. The debt is the second highest on the continent, coming after the $4,000 owed by Ethiopia.

Further breakdown shows that $2.750 billion, representing 79 per cent of the total Eurobond debt, was contracted under the Mahama-led National Democratic Congress government.

Ghana first went to the Eurobond market in 2007, and contracted $750 million. This was followed by another $750 million in 2013, while each of 2014 and 2015 witnessed another $1 billion being added to the debt.

The Mahama government borrowed at 10.75% in the last Eurobonds issue which is spread over 15 years, a figure analysts say was the highest in Africa at the time.

Even though African countries like the Democratic Republic of Congo, Gabon, Côte d'Ivoire, Senegal, Angola, Nigeria, Tanzania, Namibia, Rwanda, Kenya, Ethiopia and Zambia issued sovereign bonds just like Ghana, international financial analysts fear all does not look well for the country, which is expected to repay a principal amount of $750 million next year.

With a crippling economy soaked in huge debts, there are also fears that Ghana stands the high risk of being plunged into further serious financial crises, notwithstanding the bailout from the International Monetary Fund.

Conversation.com reports that with an external debt of more than $11 billion, and a total of $23.38 billion in both local and external debts, representing more than 55% of Gross Domestic Product, "Ghana's future looks very desolate." Ghana is expected to pay GHc10.5 billion in interest payment on existing loans by 2016.

Ghana's poor fiscal discipline is even now serving as a warning to other African countries, with the Governor of the Bank of Uganda, Emmanuel Mutebile, quoted as saying: "We should not be complacent about the dangers of big projects built on sovereign debt because it would be unwise for African countries, which will never again get debt relief. From what we are seeing in Ghana, we are not yet ready to issue sovereign bonds."

The NDC government's mode of borrowing has been sharply criticized by many, including the Vice Presidential Candidate of the New Patriotic Party, Aljaji Mahamudu Bawumia.

Dr Bawumia had in countless occasions pointed out the deterioration in public finances, ballooning and unsustainable public debt, loose monetary policy, deteriorating external payments position and the declining growth rates that had all contributed to a situation where the economy could not meet its obligations and therefore needed a bailout to stabilize the economy. It can be recalled that the Minority in Parliament had also opposed attempts by the government to borrow $ 1 billion from the international market. According to the New Patriotic Party minority, they opposed the borrowing due to poor economic management on the part of the Mahama administration. Member of Parliament for Obuasi West, Kweku Kwarteng, told the media the decision was informed by the unwarranted government borrowing, characterized by excessive domestic loans.

"What government does is that it borrows to finance recurrent expenditure and the way it does this is that it goes to the domestic market to borrow short-term instruments – short term bonds, treasury bills. That kind of borrowing government does without going to Parliament. When it is time to repay, then government comes to Parliament and then says 'now give me the chance to borrow properly to finance those short-term instruments,'" Kwaku Kwarteng, who is a member of the Parliamentary Select Committee on Finance explained.

Experts believe the financial problems faced by the country was brought on by the government's reckless borrowing, with little to show for, and bad policies which rather serve as avenues for making money by some unscrupulous members of the NDC.