NDC Are Smart Drunkards; Owe $100m For Dumsor

New Patriotic Party (NPP) Vice-Presidential candidate for the 2016 elections, Dr. Mahamudu Bawumia, yesterday compared the ruling National Democratic Congress' (NDC's) borrowing record to an alcoholic who believes in 'smart drinking' regardless of repeated warnings about the fatality of the habit.

His remark was a veiled reaction to the Finance Minister, Seth Terkper's rebuff in the face of queries about the country's debt stock running into several billion Ghana cedis when he said Ghana was engaged in smart borrowing.

'As I have said before, this is a frightening rate of accumulation of debt by any standard and it demonstrates a degree of recklessness in the management of Ghana's debt. The Government is however on record as saying that it has actually been undertaking 'smart borrowing'. One can only shudder to think what 'not so smart borrowing' would look like,' he stated.

The Minister of Finance, Dr Bawumia also stated, recently said 'that the increase in the debt stock is not our fault.'

'Really? When it was this same government that responded to warnings on the rate of borrowing by saying it had the capacity to borrow and would continue borrowing? How then can it not be their fault? Who increased the debt stock by GH¢66.6 billion in six years? Is it the fault of some dwarfs? Who did the 'smart borrowing?'' he further queried.

Dr Bawumia told his audience that Ghana's debt stock has skyrocketed by 700% in six years, with Government borrowing being pegged at an average of 116% every year.

It is 'really mindboggling, the frightening rate of accumulation of debt by any standard,' he said.

He explained that Ghana is so cash-strapped that it could not meet its interest payments to the African Development Bank (AfDB) and has since been suspended.

He says Ghana now joins an 'exclusive list' of countries under AfDB sanctions with other economies like Somalia, Sudan, Zimbabwe and Djibouti.

He recalled how a Zimbabwean friend called him to say 'comrade, congratulations…..we are all together now'.

Dumsor
Dr Bawumia revealed that the reason behind Ghana's current power crisis is Government's failure to settle a $100 million debt owed the Nigerian Gas Company, West Africa Gas Pipeline, leading to the company's refusal to supply gas to the country.

The situation is making it difficult for Nigeria to supply gas to the country as it is supposed to, he said.

He made these known when he was delivering a speech at the Central University College's 'Distinguished Speaker Series' held at the university's main campus at Miotso near Tema, to dissect Ghana's economic chances as it seeks a bailout from the International Monetary Fund (IMF).

'The untold story of the erratic gas supply from Nigeria is that Ghana owes Nigeria Gas $100 million. Nigeria Gas is therefore dragging its feet with regard to the supply of gas to Ghana while this amount is unpaid,' he said.

In November last year, the Ghana Grid Company (GRIDCo) explained that the erratic power supply to consumers was as a result of the difficulty in getting gas from Nigeria.

The NPP running mate also revealed that Government owes the Volta River Authority (VRA) GH¢1 billion, compromising the Authority's balance sheet and its ability to import crude oil for the generation of power.

This has caused the VRA to overuse the Akosombo Dam 30 percent more than recommended since 2012, thereby causing the drop in the water levels of the dam.

He also indicated that Government also owes the Electricity Company of Ghana GH¢700 million, and that the current power crisis is more of a financial problem than a technical one.

Gloomy IMF Bailout
He posted a negative prognosis for the IMF bailout because, as he put it, the data upon which it is based is not credible.

Most Ghanaians from both academia and politics have been anxiously waiting for this rare opportunity to have the IMF bailout dissected.

The position of Dr Bawumia, a visiting professor of the Central University College, is informed by what according to him are inconsistencies with the two main sets of data – inflation and GDP – upon which the bailout is hinged.

Last Year's Prediction
It is instructive recalling last year's chapter of the distinguished persons' lecture at the same venue when Dr Bawumia predicted Ghana's recourse to the IMF for a bailout given the declining state of the economy – something President John Mahama discounted at the time.

Government, it would be recalled, at the time, said although it needed the bailout, it was more about obtaining policy credibility.

'The main priority of the programme is to restore debt sustainability through a sustained fiscal consolidation and to support growth with adequate capital spending and a reduction in financing costs,' he said.

He faulted the inflation data provided for the bailout, describing it as suspect and reminding Ghanaians about how he once reprimanded staff of the Ghana Statistical Service (GSS) over the wrong contents of the food basket they use in their measurement of inflation.

Although they squirmed and debunked his position, the contents were eventually altered when an IMF team directed them to review the contents of the food basket.

Ferdinand Ayim Lectures
That was in May 2012 during the Ferdinand Ayim Memorial Lecture.

Available evidence, according to him, did not match the food price inflation from the GSS, explaining that since 2009 the normal relationship between food and non-food inflation seems to no longer exist.

Food Price Inflation
It is also instructive that the data food price inflation as assembled by the Food and Agriculture Minister is at variance with the GSS data.

'While the MOFA estimated an increase in overall food price inflation from 0.7% in January to 26% by December 2014, GSS on the other hand estimated a decline in food price inflation from 5.7% in January to 2.8% by December 2014,' he said.

Turning to the GDP figures which he said are unreliable, the economist noted that 'when the 2015 budget was announced, I had the opportunity to point out that the purported growth of real GDP by 6.9% in 2014 was not credible. How can an economy which went through so much turmoil in 2014, with a 31% depreciation of the currency and massive load shedding register real GDP growth of 6.9% only to decline sharply to 3.9% in 2015 when the government claims the economy is in recovery?'

Oil Curse
He was worried that in spite of the massive revenue inflows in oil cash recorded by the NDC government, Ghana is steeped in huge debt running into over GH¢76 billion in just six years from January 2009 from GH¢9.5 billion.

Continuing, he said, 'Notwithstanding all the efforts to avoid the oil curse, public finances began to deteriorate as the 2012 presidential and parliamentary elections drew closer. In the 2012 election year, Ghana's budget deficit was a whopping GH¢8.7 billion, amounting to 12.0% of GDP. This is the highest recorded budget deficit in Ghana's history.

Financial Indiscipline
Government, he lamented, abandoned all fiscal discipline so as to win the 2012 elections following which it continued to maintain an expansionary fiscal stance leading to a further deterioration of public finances.

Cash-Strapped
Dr Bawumia noted that the bad state of public finances has virtually left the economy cash-strapped and unable to satisfy even basic statutory obligations, adding that the current situation is surprising, as the country in the last six years has had access to unprecedented resources in Ghana's history.

The auditorium was full, with dignitaries like Nana Akufo-Addo, NPP flagbearer, Dr Anthony Akoto Osei, Gabby Otchere-Darko and others present.

 By A.R. Gomda