Executive Secretary of Alliance for Social Equity and Public Accountability (ASEPA), Mr. Mensah Thompson, has stated that government over relying on borrowing instead of revenue general in regards to the domestics dollar and Energy Sector Levy Act (ESLA) issue.
A statement signed and issued by Mr. Thompson and copied to Today yesterday in Accra noted that managing an economy has never been easy, especially the Ghanaian local economy, with its data mobilisation challenges due to the huge informal market.
This, according to him, makes it difficult to actually access the economy based on statistical indicators which may not necessarily reflect the actual performance of the economy.
He stated that the government’s continuous statement that the micro indicators looked good when “we know the government keeps missing all its revenue targets was not helping matters.”
Mr. Thompson asserted that most of government funded programmes were struggling because of lack of funds and most importantly, payment of public sector wages has now become a headache for the government.
This, according to him, coupled with the heavy corporate debt for most of government corporations have forced the government to go to the bond market to raise the ESLA bond.
According to him, in April this year, he pointed out that the government raised $2.5 billion dollars from the bond market, and that was aside other international credit arrangements.
“Now the government is on the market again raising about 6 billion Ghana cedis with a specially created company called ESLA.
“Now because this bond has no government guarantee, it attracted an interest rate of about 19.5% which is very high considering the fact that the main purpose of this bond is to defray energy sector debts.
“So if we are borrowing at this high rate just to pay off already existing debts then we are in a serious trouble,” he noted.
Again, he mentioned that the government has initiated steps to issue a dollar- denominated bond on the local market which is expected to raise additional capital for government consumption.
He said “It is surprising to see that head of the economic management team in the person of Dr. Bawumia, who in opposition raised serious reservations about government’s borrowing appetite, was now engaged in a borrowing frenzy.”
He noted that the government said it was going to restructure the public debt but as at now, “we haven’t seen much of that restructuring apart from continuously adding onto the existing high public debt.
“We think the government is relying excessively on borrowing and that comes with huge cost to the tax payer.
“We are therefore, encouraging the government to expand its revenue mobilisation base.
Story: Freeman Koryekpor Awlesu