[ 2015-03-26 ]

NDC Are Smart Drunkards; Owe $100m For Dumsor
New Patriotic Party (NPP) Vice-Presidential
candidate for the 2016 elections, Dr Mahamudu
Bawumia, yesterday compared the ruling National
Democratic Congress’ (NDC’s) borrowing record
to an alcoholic who believes in ‘smart
drinking’ regardless of repeated warnings about
the fatality of the habit.

His remark was a veiled reaction to the Finance
Minister, Seth Terkper’s rebuff in the face of
queries about the country’s debt stock running
into several billion Ghana cedis when he said
Ghana was engaged in smart borrowing.

“As I have said before, this is a frightening
rate of accumulation of debt by any standard and
it demonstrates a degree of recklessness in the
management of Ghana’s debt. The Government is
however on record as saying that it has actually
been undertaking “smart borrowing”. One can
only shudder to think what “not so smart
borrowing” would look like,” he stated.

The Minister of Finance, Dr Bawumia also stated,
recently said “that the increase in the debt
stock is not our fault.”

“Really? When it was this same government that
responded to warnings on the rate of borrowing by
saying it had the capacity to borrow and would
continue borrowing? How then can it not be their
fault? Who increased the debt stock by GH¢66.6
billion in six years? Is it the fault of some
dwarfs? Who did the “smart borrowing?”’ he
further queried.

Dr Bawumia told his audience that Ghana’s debt
stock has skyrocketed by 700% in six years, with
Government borrowing being pegged at an average of
116% every year.

It is “really mindboggling, the frightening rate
of accumulation of debt by any standard,” he
said.

He explained that Ghana is so cash-strapped that
it could not meet its interest payments to the
African Development Bank (AfDB) and has since been
suspended.

He says Ghana now joins an “exclusive list” of
countries under AfDB sanctions with other
economies like Somalia, Sudan, Zimbabwe and
Djibouti.

He recalled how a Zimbabwean friend called him to
say “comrade, congratulations…..we are all
together now”.

Dumsor

Dr Bawumia revealed that the reason behind
Ghana’s current power crisis is Government’s
failure to settle a $100 million debt owed the
Nigerian Gas Company, West Africa Gas Pipeline,
leading to the company’s refusal to supply gas
to the country.

The situation is making it difficult for Nigeria
to supply gas to the country as it is supposed to,
he said.

He made these known when he was delivering a
speech at the Central University College’s
‘Distinguished Speaker Series’ held at the
university’s main campus at Miotso near Tema, to
dissect Ghana’s economic chances as it seeks a
bailout from the International Monetary Fund
(IMF).

“The untold story of the erratic gas supply from
Nigeria is that Ghana owes Nigeria Gas $100
million. Nigeria Gas is therefore dragging its
feet with regard to the supply of gas to Ghana
while this amount is unpaid,” he said.

In November last year, the Ghana Grid Company
(GRIDCo) explained that the erratic power supply
to consumers was as a result of the difficulty in
getting gas from Nigeria.

The NPP running mate also revealed that Government
owes the Volta River Authority (VRA) GH¢1
billion, compromising the Authority’s balance
sheet and its ability to import crude oil for the
generation of power.

This has caused the VRA to overuse the Akosombo
Dam 30 percent more than recommended since 2012,
thereby causing the drop in the water levels of
the dam.

He also indicated that Government also owes the
Electricity Company of Ghana GH¢700 million, and
that the current power crisis is more of a
financial problem than a technical one.

Gloomy IMF Bailout

He posted a negative prognosis for the IMF bailout
because, as he put it, the data upon which it is
based is not credible.

Most Ghanaians from both academia and politics
have been anxiously waiting for this rare
opportunity to have the IMF bailout dissected.

The position of Dr Bawumia, a visiting professor
of the Central University College, is informed by
what according to him are inconsistencies with the
two main sets of data – inflation and GDP –
upon which the bailout is hinged.

Last Year’s Prediction

It is instructive recalling last year’s chapter
of the distinguished persons’ lecture at the
same venue when Dr Bawumia predicted Ghana’s
recourse to the IMF for a bailout given the
declining state of the economy – something
President John Mahama discounted at the time.

Government, it would be recalled, at the time,
said although it needed the bailout, it was more
about obtaining policy credibility.

“The main priority of the programme is to
restore debt sustainability through a sustained
fiscal consolidation and to support growth with
adequate capital spending and a reduction in
financing costs,” he said.

He faulted the inflation data provided for the
bailout, describing it as suspect and reminding
Ghanaians about how he once reprimanded staff of
the Ghana Statistical Service (GSS) over the wrong
contents of the food basket they use in their
measurement of inflation.

Although they squirmed and debunked his position,
the contents were eventually altered when an IMF
team directed them to review the contents of the
food basket.

Ferdinand Ayim Lectures

That was in May 2012 during the Ferdinand Ayim
Memorial Lecture.

Available evidence, according to him, did not
match the food price inflation from the GSS,
explaining that since 2009 the normal relationship
between food and non-food inflation seems to no
longer exist.

Food Price Inflation

It is also instructive that the data food price
inflation as assembled by the Food and Agriculture
Minister is at variance with the GSS data.

“While the MOFA estimated an increase in overall
food price inflation from 0.7% in January to 26%
by December 2014, GSS on the other hand estimated
a decline in food price inflation from 5.7% in
January to 2.8% by December 2014,” he said.

Turning to the GDP figures which he said are
unreliable, the economist noted that “when the
2015 budget was announced, I had the opportunity
to point out that the purported growth of real GDP
by 6.9% in 2014 was not credible. How can an
economy which went through so much turmoil in
2014, with a 31% depreciation of the currency and
massive load shedding register real GDP growth of
6.9% only to decline sharply to 3.9% in 2015 when
the government claims the economy is in
recovery?”

Oil Curse

He was worried that in spite of the massive
revenue inflows in oil cash recorded by the NDC
government, Ghana is steeped in huge debt running
into over GH¢76 billion in just six years from
January 2009 from GH¢9.5 billion.

Continuing, he said, “Notwithstanding all the
efforts to avoid the oil curse, public finances
began to deteriorate as the 2012 presidential and
parliamentary elections drew closer. In the 2012
election year, Ghana’s budget deficit was a
whopping GH¢8.7 billion, amounting to 12.0% of
GDP. This is the highest recorded budget deficit
in Ghana’s history.

Financial Indiscipline

Government, he lamented, abandoned all fiscal
discipline so as to win the 2012 elections
following which it continued to maintain an
expansionary fiscal stance leading to a further
deterioration of public finances.

Cash-Strapped

Dr Bawumia noted that the bad state of public
finances has virtually left the economy
cash-strapped and unable to satisfy even basic
statutory obligations, adding that the current
situation is surprising, as the country in the
last six years has had access to unprecedented
resources in Ghana’s history.

The auditorium was full, with dignitaries like
Nana Akufo-Addo, NPP flagbearer, Dr Anthony Akoto
Osei, Gabby Otchere-Darko and others present.

Source - Daily Guide

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