Public Debt Has Increased By 50% - Finance Ministry
The Ministry of Finance and Economic Planning has denied claims that the government has increased the public debt by 100 per cent in just two and a half years.
In a statement issued in Accra Thursday, it explained that the country's external debt, which was $6.3 billion in 2005, dropped to $2 billion in 2006, following the debt relief under the HIPC initiative.
Soon after that, it said, it increased significantly again, reaching $4 billion in 2008, representing a 100 per cent increase between 2006 and 2008.
It said under the Prof Mills-led NDC government between 2008 and 2010, the debt only increased from $4 billion to $6 billion, coming up to 50 per cent, stressing that 'even this increase is attributed to the disbursement of a number of loans that were contracted during the NPP administration'.
'It is factually wrong for anyone to suggest that this government has increased the public debt by 100 per cent in just two years because there are numerous loans that the previous administration has contracted which are still being disbursed and adding to the debt stock,' the statement quoted Dr Kwabena Duffuor, the sector Minister, as saying.
The ministry was responding to a publication by The New Statesman newspaper which suggested that the Mills government had doubled the national debt in just two years.
The statement said although the ministry and the government did not want to be distracted from their core mandate of managing the national economy for the betterment of all Ghanaians, it found it important to set the record straight regarding the position of the national debt.
A total of $1.7 billion external loans were contracted in 2007 alone, $2.7 billion in 2008, while in 2009 and 2010 the external loans were $1 billion and $2.7 billion, respectively.
On the domestic front, the statement said a domestic debt equivalent of $4 billion was contracted in 2008, which increased to $4.2 billion in 2009 and $5.6 billion in 2010.
It explained that the increase in the domestic debt stock between 2009 and 2010 was the result of government's borrowing from the domestic market to clear the huge arrears left by the previous government.
While disputing all figures with respect to arrears quoted by the newspaper as factually wrong and inaccurate, the statement made it clear that the previous government left behind arrears of over GH¢2 billion across all sectors of the national economy.
'Handling these huge arrears has been one of the biggest challenges that faced this government from the beginning of its tenure. Till date, the government has liquidated over two-thirds of the arrears, including some GH¢800 million which was accumulated between 2009 and 2010,' it added.
It described as unfortunate the insinuation that the STX loan agreement and the Industrial and Commercial Bank of China (ICBC) loan proposal for the eastern corridor road were part of the national debt stock.
According to the statement, the ICBC had submitted a proposal which was currently under discussion and had not been contracted.
On another loan called Opus 7, it explained that the government conducted due diligence on the financier but the result was unsatisfactory and so it threw away the proposal.
'The ministry wishes to state that until disbursements are done, all loan agreements remain commitments and not part of the national debt.