HIPC Not Poverty

Minister for Information and Member of Parliament for Okaikoi North Nana Akomea has described as unfortunate and unhelpful comment from critics of the government that the Highly Indebted Poor Countries Initiative (HIPC) necessarily signifies poverty. He also debunks the contention that the decision to opt for HIPC and label certain projects executed with proceeds from the HIPC Fund means glorifying our poverty and washing our dirty linen in public.

But he also submits that “refusing to recognize our poverty is just being hypocritical, and burying our heads in the sand,” since recognizing a problem is the first step to a solution.

“Our state of poverty and debt after 46years of independence is certainly nothing to be proud of. But that is different from a policy strategy such as HIPC, which is meant to drastically reduce our debt.” The Information Minister also appealed to critics of such major socio-economic policies to distinguish between poverty, indebtedness and the HIPC Initiative, a policy tool that he said would help Ghana get out of poverty and positively improve its situation.

Addressing a press conference in Accra yesterday to announce the probability of Ghana reaching the completion point in July this year upon assessment by the Bretton Woods Institutions, Nana Akomea suggested that to insist that by embarking on a policy to reduce poverty is tantamount to glorifying poverty is not only an unfortunate comment but a very unhelpful attitude to national development. He advised the press that not to prematurely talk about a rise in national debt and government's failure to ensure debt sustainability because even though it opted for the Initiative, it is at the stage of completion when the total quantum of debt relief is firmly committed that the nation can do proper debt sustainability. By the policy, Ghana is yet to reach the completion point of the HIPC. It is at that point that our creditors the World Bank, IMF and other bilateral creditor nations provide sufficient relief that could enable Ghana achieve debt sustainability. Nana Akomea said the quantum of debt relief Ghana would receive is estimated at $3.5 billion out of which the bilateral and commercial creditor nations would immediately write off a total debt stock of $1.5 billion, while the multilateral like the World Bank and International Monetary Fund for instance would provide a relief of about $100 million every year for a period of 20 years. During that period, the ratio of Ghana's total debt stock to her total annual domestic revenue will fall from the current 570 percent to 250 percent while the her total debt ratio to total annual export revenue will also fall from the present 157 percent to below 100 percent.

He said it is therefore crucial that government with the support of civil society stays on course particularly with the prudent economic management policies it has embarked upon which has resulted in successes in revenue mobilization, is sustained to help unlock the stranglehold of debt service payments on the economy thus making the country's debt servicing more sustainable.

The Information Minister said while government appreciate certain comments and criticisms about the HIPC Initiative, largely most pronouncements has been very unfair towards its good intensions of getting over $3 billion relief from the Bretton Woods Institutions.

He said criticism to the effect that the HIPC Initiative has failed because is not the best strategy to relief Ghana out of the neck breaking debts position it finds itself, are misplaced because HIPC unlike any other debt relief, offers probability of debt relief much greater than provided under any existing debt relief arrangement. Nana Akomea explained also that labeling of the projects, “HIPC Benefit” are nothing but to dramatize to everybody the concrete deliverables government has chalked from savings from the HIPC Initiative.

The signage “HIPC Benefit” he said is very justified as far as government is concerned, but for it “one can imagine how loud these criticisms would have set the government running all over the country to identify the projects”.

“The fact that even with the labeling of the benefits people can still say that HIPC has not been beneficial goes to justify the wisdom in labeling the projects” Touching on the president's remarks last year that Ghana would get out HIPC this year and the severe criticism he was subjected to, to the effect that if the Initiative is so good and delivering development projects, then why the anxiety to get out, Nana Akomea stated what the president sought to put across was a clarion call on all a sundry to provide the needed moral support to the government to strive hard to reach the completion point so the country can have access to much bigger debt relieves.