Finance Minister Seth Terkper says the government has tamed its taste for spending money it does not have.
He said the Budget deficit which reached historic levels of 12 per cent of GDP in 2012, has been cut significantly.
“The government is living within its means,” he told Parliament Monday, July 25, 2016, whilst presenting the supplementary budget to the House.
He said despite a slight overrun of 182.6 million cedis on wage bill, “general expenditures are being contained to take account of the likely shortfalls in oil revenues.”
Citing provisional data for January to May this year, the Finance Minister said, “the cash fiscal deficit was 2.5% of GDP against a 2.2% target.”
These figures, he said, compared favourably with the same period last year.
“The practical meaning of the annual decline in [budget] deficit is that government is living within its means,” he said.
Mr. Terkper told Parliament that this is buoyed by the fact that government is borrowing less from banks, thereby reducing pressure on interest rates.
The government has been heavily criticized for what the critics call reckless borrowing over the last few years.
The high level of borrowing, it has been suggested, imposed a heavy debt burden on the country.
At one point, the International Monetary Fund classified Ghana as a high risk, debt distressed country.
The Finance Minister said the government has minimized the rate of borrowing and achieved the slowed rate of accumulating debt since the country returned from HIPC.
Terkper debunks return to HIPC speculations
He also rubbished suggestions that Ghana will go back to being a Highly indebted Poor Country (HIPC).
Seth Terkper indicated in his supplementary budget statement that as at May 2016, Ghana’s debt had reduced from 72% to 63%.
The HIPC Initiative, introduced by the International Monetary Fund (IMF) and the World Bank provides debt relief and low-interest loans to cancel or reduce external debt repayments.
As at December 2015 the country’s debt was Ȼ 97.2 billion, out of which Ȼ39.4 billion is domestic and Ȼ 57.8 billion foreign but that figure increased in 2016, the minister admitted.
According to him, as at May 2016, the country's total debt stood at Ȼ100.8 billion with 40.9 billion being domestic and Ȼ59.9 billion being external.
By World Bank parameters, if a country’s debt-to- Gross Domestic Product (GDP) ratio crosses the 70% mark, the country is classified HIPC.
Business mogul and PPP flagbearer, Dr. Papa Kwesi Nduom and some economists had warned that the rate at which the government was borrowing could plunge the country into HIPC again.
Mr. Terkper stated in his supplementary budget presentation on Monday that Ghana’s debt to GDP ratio has fallen from 72% to 63% as at the end of May 2016, meaning the country is far from returning to HIPC.
Mr. Terkper lauded the slow growth of the country’s debt, adding that government is on course to reducing it even further.
‘The GDP grew by 3.8% by the end of 2015 better than the projected 3.5%. The economy was at 4.9 percent by the first quarter of 2016 compared to 4.5% recorded in 2015.’
Source: Myjoyonline.com
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