GHC2bn deficit is blow to economy – Economist
Economist, Dr. Lord Mensah has criticized the almost 2 billion cedis budget deficit in the advance expenditure appropriation presented by the Minister of Finance, Seth Terkper.
Parliament, on Thursday, October 20, approved the 10.99 billion cedis request by the Finance Minister.
This also came after several deliberations both at the Finance Committee level and on the floor of the House.
But speaking to Citi Business News on the development, Dr. Lord Mensah explained that the development is worrying as government’s borrowing is not committed to reflect in growth of the economy.
“If you look at the two billion cedis deficit, as we stand now just in the first quarter, it means that whatever money you are going to raise on the international market, if its 1.8 billion or whatever billion use that to service only the interest,” he stated.
“But you’re supposed to borrow to grow…Borrowing has to go with growth; because any country that incurs more debt the country grows,” he added.
Meanwhile the government intends to rake in some 8 billion cedis in revenue for the first three months of next year.
Also, a greater percentage of the expenditure for the first quarter of 2017 is expected to be allocated to recurrent expenditure.
This is also scheduled to involve salaries and allowances for public sector workers.
However citing instances from across the globe, the Economist maintained that Ghana’s inability to develop infrastructure with the amounts borrowed will have dire consequences for the country.
“If you go to the Americas, their debt level is about 1.25% of their GDP and you go to Japan its about 200% the reason why they don’t complain so much about their debt level is that they have a lot to show for they have grown to a point where the infrastructure in place can service this debt,”
“So if you’re borrowing to just service interest alone I don’t think there’s room for growth and that is the main problem this country is likely to face,” Dr. Mensah stated.