Rather than using the growth that resulted from the rebasing to mobilise more revenue, Mr Adongo said the government had been deceived into thinking that the rebased economy provided more fiscal space to take on more debt.
This is reckless, he said, explaining that it portends a debt trap to the country and government in particular.
He made the observations in a statement he released on January 28, in response to the country’s debt statistics released by the Bank of Ghana on January 26.
It showed that the national debt stock had grown from GH¢139.3 billion in November 2017 to GH¢175.9 billion in November 2018.
“It suggests that while our neighbours are mobilizing 20 per cent to 22 per cent from their national income to support development of their countries for current and future generations, we are sleeping on this income with an average of 16 per cent of mobilization of national income to support development,” he stated.“The government does not seem to know that expanded GDP is only relevant if you can mobilize a significant part of it for development. Rather, they have resorted to using it to promise the world that our incomes are increasing and we have found new income so lend us more money for our children, the future generation, will find a way to mobilize that money to pay the lenders. This is unfortunate,” he added.
He said what was even more painful was the fact that these loans are not being invested in the infrastructure which would benefit the future generation but rather consumption.
“Between November 2017 and November 2018, the government added GH¢33.6 billion to our public debt. That is just within 12 months. At this rate, we are heading towards adding some GH¢70 billion to our public debt in two years. This means we would have wiped off the GH¢50 billion additional income (that resulted from the rebasing of GDP) in debts,” he noted.
“This borrowing spree has been motivated, wrongly, by the enhanced GDP, which ensures that the large debt is still lower in percent terms to the rebased GDP. No wonder the government finds comfort in pointing to a ‘lower’ debt-to-GDP ratio as reason for comfort, however, deceptive,” he added.