The Head of the Finance Department of the University of Ghana Business School is calling for a more innovative financing mechanisms by government in order to enable it implement its infrastructural development agenda.
According to Prof Godfred Bopkin, the payment of salaries as well as interest payments on debts accrued takes over 90 percent of the country’s tax revenue which lives government with very little to embark on any meaningful infrastructure development.
For a government that has made ambitious promises to build one factory in every district, one dam in every village and give every constituency one million dollars for development projects in the northern, Prof Bopkin said there is also the need to develop a better Private Public Partnership intervention in order to execute its infrastructure programmes.
He was reacting to the budget preview conference held by the Minority in Parliament Wednesday.
Contrary to promises to create jobs after the reading of the 2018 budget, Cassiel Ato Forson who is the Minority spokesperson on Finance, said the government will fail to create any job for the unemployed youth.
According to him, the commercial banks which would have to give loans to businesses to expand and create jobs for the teeming youth have been left in a state of liquidity.
“If they don’t have liquidity how can they lend to business to expand and create jobs?” he asked.
“There is going to be severe ahonkyere [suffering] in 2018” he predicted, adding Ghana will be joining the unenviable group of highly indebted poor nations by 2019 if the current debt profile of the current government should continue.
In a response however, Prof Bopkin told Joy News’ Emefa Apawu, if it was a matter of returning to HIPC Ghana had already met the criteria in 2016 even before the NPP came to power.
When he was asked if the current d challenge the country is going through can be blamed on the NDC he said:
“Partly yes. And if you look at the debt stock, it is not only an NDC debt. It is Ghana’s debt. It is looked at in cumulative basis. But when you look at it proportionately you can agree the previous government has added more to our debt stock than probably any other government in our history.
He said when Ghana completed the HIPC initiative in 2004 and other initiatives in 2006 the country’s debt to GDP ratio came down to less than 30% but the country then started climbing up ambitiously and “we thought we would be borrowing our way through our problems.”
“If we had invested those monies very the economy would have responded,” he stated.
The minority also claimed government will have no money for its infrastructural development. Whilst Prof Bopkin believes there is basis for that assertion he was quick to add that it was not new.
He said in the 2016 budget the country spent more on debt servicing than it allocated to infrastructure development.
According to him, the tax revenue generated in 2016 was ¢25 billion. Out of that, ¢14 billion was spent on wages and gratuities which is 56% of the total amount.
Out of that same amount, a little over 11 billion cedis was spent on debt servicing. The two takes more than 90% of the tax revenue.
“The level of rigidity in our budget will not disappear merely because there is a change in government,” he said.