Another HIPC Looming – Economist Warns

An economic analyst has warned that there are currently some indicators signaling that Ghana might move to a debt crisis similar to HIPC. Ghana’s budget deficit stood at about 12% of Gross Domestic Product in 2012 and this year, government continues to borrow hugely both domestically and on the international market. Head of Economics at the Institute of Scientific, Social and Economic Research (ISSER), Dr Robert Darko Osei told Citi Business News, the nation’s indebtedness was far from over. “The domestic deficits are high already and are increasing and they are not going to go away.” Dr. Darko Osei noted that Ghana’s attainment of a lower middle income status meant the country was not going to get concessionary loans as it used to hence; there is the need to aggressively generate revenue internally. The ISSER economist said even if all of Ghana’s oil revenues were used to finance that deficit, the economy will still be in a dire situation. “Even if you compute your oil revenues of say about 1billion dollars, it is just about 60% percent of the deficit. So even if you took all your oil revenues and plugged it in your deficit, you have a hole.” “The debt situation is such that if we don’t seriously begin to look at the questions and about how they are being financed, then gradually we are running to a situation that may not be HIPC but a different acronym with the same effects”, he added. Meanwhile, the Minority in Parliament have also cautioned government of its thirst to borrow. In a statement issued, they indicated that between December 2012 and August 2013 (that is within the last 8 months), government had added GH˘8.8 billion to Ghana’s public debt. This meant, government was borrowing at a rate of GH˘1.1 billion per month.