Public Debt usage in Ghana

The public debt of Ghana is getting to unsustainable proportions, especially as it inches to 80 % of GDP. Consequently, political parties and their communicators are pressured to structure the debts into layers of the rate of accumulation.

The intention of this creation is to communicate to the citizens, the contribution of each party in the accumulation of the entire public debt.

While the purpose of such a strategy may serve a political aim, it does not really account for the usage of the debt capital of the state – the use of public debt. The communication only outlines nominal figures which cannot be relied on to make any critical financial and economic analysis. There should be a standard accounting procedure to account for the use of public debts the state accumulates annually.

The rates of public debt accumulation between 2004 and 2020, by some selected Presidents, are given as follows: J.A Kufour (2002-2008) = 30%, J.E.A Mills (2008-2012) = 269%, John Dramani Mahama (2012-2016) = 243% and Nana Akuffo-Addo (2016-2020) = 137%.

These figures should have been accompanied by tables or additional information that give clarity to their usage in delivering the common good to the people of Ghana. The percentages of accumulation churned out do not have any value, in giving a proper explanation regarding the efficiency of a government in its debt utilisation.

Many African countries accumulate unproductive public debt capital as the use of the debt capital does not translate into real outputs or services. It is therefore crucial for the accounting authorities to demonstrate the use of the debt regardless of the percentage of accumulation.

For instance, the 30% rate of accumulation, as a contribution to the entire public debt, by the Kufour Administration does not mean much if its usage is not accounted for. A proper account of the use of the amount of the debt that a particular administration accumulated may show better outcomes or results than the ones successive administrations had taken on, even if the amount is lesser in value.

There is no political capital to gain by the production of statistical data to show to the citizens which government borrowed more or which one borrowed less. There is much futility in the path chosen by the political parties and the intentions they have in accounting for their role in the accumulation of the mounting public debt.

This is because the citizens demand to become aware of the use of the debts various governments took on and not who contributed hugely and who did not. The political parties feel much fulfilled if they are able to indicate a low level of contribution to the debt stock.

The goal for generating the statistical figures is to display a level of sincerity to the public as they always promise to reduce the public debt to sustainable levels.

Yet, if the state is viewed as a corporate entity, its shareholders here referred to us citizens, would have demanded to know the effectiveness and efficiency of the use of the debts its managers take on. Therefore, clearly, the citizens should have knowledge about what the mounting public debt produced for them in road construction, the building of schools and hospitals, provision of electricity and water as well as the delivery of the other common goods promised them during campaigns.

Thus, it will be expedient for the political parties to refer to their budget statements and point to the people what the borrowed money procured for the people. Various governments usually indicate in their budget statements the purpose for borrowing specific amounts. If the two major political parties really want to show their level of effectiveness and efficiency, they should indicate the projects and services the amount borrowed generated.

The weaknesses of statistical data do not allow for a better appreciation of the purpose for generating those figures. Until these sets of data are accompanied by additional pieces of information, the citizens will always have the feeling that the managers of the economy continue to engage in activities that marginalise their interests.

The current system of accounting for the contribution of the two major parties to the public debt of Ghana impoverishes the populace as there seems to be information asymmetry in the method adopted to account for the debt and the information communicated eventually.

Emmanuel Kwabena Wucharey

Economics Tutor, Advocate, and Religion Enthusiast.