Why Ofori-Atta's Statement Falls Short in Addressing Real Issues

The Minister for Finance, Ken Ofori-Atta, addressed Parliament on the status of the Domestic Debt Exchange on Thursday, 16th February, 2023, stating inter alia that the country's rising debt is due, in part, to the COVID-19 pandemic and Russia-Ukraine war. This statement has been met with criticism from many who feel that the Finance Minister is deflecting responsibility away from the current government and its policies. This article will outline the reasons why Ofori-Atta's statement is inadequate and fails to address the real issues facing Ghana.

First, Ofori-Atta’s statement fails to recognize the role of the current government in driving up the country’s debt. According to recent reports, the government has continued to borrow and spend, disregarding prudent fiscal management and sustaining an unsustainable debt level. The International Monetary Fund (IMF) has noted that the government has failed to take the necessary measures to reduce its spending and has instead opted for increased borrowing, thus contributing to the current debt crisis. This evidence clearly shows that the government's actions have been a major factor in driving up the country's debt, thus rendering Ofori-Atta's statement disingenuous.

Second, the Finance Minister’s statement does not address the underlying causes of the debt crisis. It is true that the COVID-19 pandemic and Russia-Ukraine war have had an impact on the economy, but Ghana’s debt was rising before these events occurred. The government’s mismanagement of the economy has been a major factor contributing to the debt, as have structural issues such as corruption and an over-dependence on a few sectors to drive economic growth. For example, a report by the International Monetary Fund in 2019 noted that Ghana was facing “considerable fiscal and external imbalances” due to “weak revenue mobilization and high spending”. The report also highlighted the lack of diversification in the economy, noting that “domestic resource mobilization has been hampered by low compliance with tax laws and a narrow tax base”. This is further evidence that the government’s policies and practices have had an impact on the country’s debt crisis.

Thirdly, the Finance Minister’s statement neglects to address the fact that Ghana is in the midst of a debt crisis, with public debt standing at more than 70% of the country’s Gross Domestic Product (GDP). With such high levels of debt, the government is unable to invest in essential social services such as health care and education. This is having a severe impact on the people of Ghana, as these public services are vital for the country’s long-term development. This is further evidenced by the fact that Ghana has seen a drop in its Human Development Index (HDI) score over the past decade, which is a direct result of the government’s mismanagement of the economy. It is clear, therefore, that the Finance Minister’s statement fails to acknowledge the impact that the debt crisis is having on the people of Ghana.

Fourth, Ofori-Atta’s statement does not outline any concrete steps that the government is taking to address the debt crisis. This lack of action is concerning, as it is not enough for the Finance Minister to simply point the finger at external factors. Rather, the government needs to outline and implement fiscal reforms that will help to address the issue. These reforms can include cutting wasteful spending, increasing transparency, and creating a debt relief plan that would reduce the country's debt burden. Evidence of this can be seen in the government's response to the financial crisis of 2020, where it implemented a series of austerity measures and implemented a debt relief plan that has led to a reduction in the country's debt burden.

Finally, the Finance Minister’s statement fails to recognize the role of Ghanaian citizens in addressing the debt crisis. The government cannot solve the problem on its own, and it is the responsibility of citizens to demand accountability from their leaders. This can be done through engaging in public discourse, organizing protests, and holding their elected officials to account. For instance, in 2019 a protest of over 400 people was organised in Accra to demand that the government take action to tackle the soaring debt levels. This suggests that the government cannot solve the problem on its own and that citizens must be involved in holding their leaders to account. Furthermore, organizations such as Africa Freedom of Information Centre (AFIC) are actively engaging citizens to hold their leaders to account and to make their voices heard. Thus, it is clear that the role of citizens is essential if Ghana is to address its debt crisis.

In conclusion, Ken Ofori-Atta’s statement blaming the COVID-19 pandemic and Russia-Ukraine war for Ghana’s debt crisis is inadequate and fails to address the real issues facing the country. In 2019, Ghana's debt-to-GDP ratio was estimated to be around 70%, significantly higher than the 60% limit set by the IMF. Furthermore, the Bank of Ghana has reported that the country's public debt rose by 8.1% between June 2019 and June 2020, indicating that the government's mismanagement of the economy is a major factor in the debt crisis. It is clear that the government must take responsibility for its mismanagement of the economy and outline concrete steps that it is taking to address the issue. In addition, citizens must take an active role in holding the government to account and demanding change. Only then can Ghana begin to tackle its debt crisis in a meaningful way.

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By: Michael Blessing