Even though government is feverishly dishing out financial instruments every week to solicit funds to support its operations, it still claims it’s not broke.
Finance Minister Seth Terkper, who recently disclosed this to Joy FM, an Accra-based radio station, stated: “The economy is not broke. We are even in an era where the Bank of Ghana (BoG) is not financing government: it has never happened,” he said.
Meanwhile, government has been borrowing every month through Treasury Bills to pay its workers.
In September, this year, it had to do a mop-up from cash previously released to Ministries, Departments and Agencies (MDAs) to pay its employees.
Borrowing records
The latest Monetary Policy Committee (MPC) report by the Bank of Ghana said the total national debt reached GH¢109.8 billion as at August, this year, representing a 65.9 percent of Gross Domestic Product (GDP).
In view of this, total revenue and grants to the country amounted to 9.4 percent of GDP as at June this year.
Also per its revised Issuance Calendar for Government of Ghana Securities for August – December 2016, government plans to issue an amount of GH¢25,270.00 million to rollover forecast maturities of GH¢23,853.56 million with the remaining amount of GH¢1,416.44 million being fresh issuance to meet government’s financing requirements.”
On average, an amount of GH¢60 million will be issued every 2-weeks for the 1-Year Note through the primary auction.
Counter revelation
Dr Nashir Issahaku, the Central Bank Governor, recently stated that the major risks to the country’s fiscal outlook included uncertainties in the international oil market, continued weakness in tax revenue mobilisation and wage pressures.
But Mr Terkper said government’s tax revenue mobilization was encouraging.
Budget deficit
Provisional data on execution of the government budget for the first half of 2016 showed a deficit of 3.1 percent of GDP against a target of 2.6 percent.
The higher than programmed deficit was primarily driven by shortfalls from income and property taxes and oil revenue.
According to the BoG Governor, “The materialisation of these risks could slow the pace of fiscal consolidation and hinder efforts to restore macroeconomic stability. Sustaining the fiscal consolidation process is therefore critical to attaining the medium-term inflation target.
“According to the IMF’s July World Economic Outlook, global growth prospects have weakened further following the UK vote to leave the EU. In addition to the lower growth forecasts, there are expectations of sustained low and negative interest rates across global financial markets, while the U.S. Fed inches closer to a year-end rate hike.
These developments could have implications for Ghana’s balance of payments.”
Uncleared cheques
Prior to the Bank of Ghana’s announcement of the total national debt situation of the country on September 18, there were claims by Minority Members of Parliament that cheques issued by the Common Fund Secretariat to pay some suppliers had not cleared.
By Samuel Boadi