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The Institute for Fiscal Studies (IFS), a fiscal policy think-tank has painted a gloomy picture of the economy as it has projected the country’s interest payment on public debt to hit GH¢69 billion by end of this year.

Attributing the tendency to government’s consistent borrowing, the institute indicated that interest costs on public debts were now higher than domestic-financed capital expenditure threatening to equal or even overtake wages and salaries if not slowed down.

“In 2017, a provisional amount of GH¢13.3 billion was recorded as interest payment on public debt. Interest payment is projected to increase to GH¢14.9 billion this year, implying that by end of 2018, total interest payment by the government on its debt since 2006 will be equal to GH¢ 68.4 billion,” the Executive Director of IFS, Professor Newman Kusi said.

He was making a presentation on “Ghana’s growing public debt – Implications for the economy” at a roundtable discussion in Accra yesterday.

The meeting drew participants from the government machinery, parliament, civil society, development partnering institutions and academia.

According to the economist, interest payment on public debt increased sharply from GH¢393.4 million in 2006 to GH¢679.1 million in 2008, GH¢2.4 billion in 2012, and then to GH¢10.7 billion in 2016.

“This means that the government paid a total of GH¢1.5 billion between 2006 and 2008 as interest on public debt, GH¢6.5 billion during 2009 to 2012, and rising to GH¢31.5 billion between 2013 and 2016.

As of 2017, our public debt had hit about GH¢138 billion and in 2018, government has hinted of borrowing GH¢10 billion. If you add the ESLA bond and the bond issued in November last year, it will take us to more than 150 billion so you can imagine the servicing cost,” he lamented.

Expatiating on the worrying situation, Prof. Kusi said, in 2017, interest payment accounted for 25.8 per cent of government expenditure, becoming a major factor behind the country’s fiscal deterioration, besides wages and salaries.

“This was the fifth successive year that total interest payment was larger than total domestic-financed capital expenditure, suggesting that interest payments will probably be financed through additions to public debt or at the expense of other key government expenditures,” he stated.

The Executive Director among others recommended that government adopts a comprehensive debt management strategy that puts a cap on the levels of gross concessional and non-concessional borrowing adding that, “limits should also be placed on contracting non-concessional loans that can become liabilities to the government.”

Professor Kusi further called for the establishment of a debt audit commission to undertake surveillance on monies borrowed and how it was expended to generate the needed revenue for the country.

He was of the view that it was high time that government enhanced its domestic revenue mobilisation strategies saying, “we need to get to the point where the loans taken can be well invested to generate the needed revenue in the country so we do not have to borrow much for other projects.”

“The establishment of an autonomous debt agency, such as ESLA Plc. is justified on the grounds that the agency will have clearly defined performance objectives and a degree of independence to manage the country’s debt, leaving the Ministry of Finance to formulate the strategy for debt management and also manage the daily risk exposure of the country’s debt portfolio,” he urged.

A group of panelists including the Former Second Deputy, Governor of Bank of Ghana, Dr. Johnson Asiama and member of the Finance Committee of Parliament, Isaac Adongo who further dissected the topic unanimously bemoaned the country’s borrowing levels calling for restraint to save the economy from external shocks.

Most Reverend Prof. Emmanuel Asante, President of the National Peace Council and Former Presiding Bishop of the Methodist Church, Ghana, who chaired the meeting called on Ghanaians to pay their taxes as government put in place the right mechanisms to widen the tax net.