The former Minister of Finance, Mr. Seth Terkper has indicated the President’s speculation that Ghana is on a path of economic recovery is wrong. He argued that the government had defaulted on external debt at a time when inflation was high and the internal budget was being mainly supported by the Bank of Ghana which was not sustainable.

He noted that for the first time in forty (40) years, the country is experiencing an economic recession. He emphasized that it is risky for the government to continue to measure economic growth while excluding interest payments, and loan arrears and argued that these measures can only be excluded on the premise that the country has its debt interests under control.

“When you grow then you know that as I grow, I can meet all these things [debt interests and arrears] and so you can use the primary balance. But what is our record? We grew in three fields; we grew with the expansion of the service sector, we grew with the injection of nearly $ 10 billion into the economy if you had a COVID loan, the IMF program which this government took over, and three additional oil fields. If a primary balance was going to prove right based on growth Ghana wouldn’t be where it is today”.
Mr. Seth Terkper

Mr. Samuel Terkper indicated that the primary balance does not show the entirety of the country’s economic status and emphasized that Ghana’s economic figures look encouraging because external debt payments have been deferred.

He also specified that when the country returns to paying these debts in 2025/2026, there will be hardships. He emphasized that the restructuring of the external bonds which will fall due in 2026 will further complicate the country’s economic challenges.

Rocky Economic Years Ahead

Accordingly, Mr. Samuel Terkper advised that the government must make provisions for paying the deferred debts in the future with the reliefs trooping into the country from external sources. He indicated that the government’s decision to pay the domestic bondholders their first coupon was strategic. He noted that it would have added to the country’s accrued debt otherwise.

“We did things differently because as I said we passed the Public Financial Management Act. Today, there is something called payables which is part of the structural conditionalities that we were calling the Contract Database; it means that we want to know our liabilities. The government stopped it. It is not a new initiative, it started in 2010 when I was the Deputy [Minister of Finance]”.
Mr. Seth Terkper

The former Minister of Finance stated that the Contract Database initiative ensured that a consensus on all awarded projects by the Ministry was made and that, the then Minister of Finance provided details of all payment certificates issued by the Ministry of Finance. He stressed that this ensured that the government had a proper idea about the country’s debts interest and arrears. “I know the figures, it was about $ 13 billion when we left office and now with the report that was published because of the IMF program, it has risen to $ 77 billion” he added.

Mr. Samuel Terkper further disclosed that the NDC government instituted the Sinking Fund to pay matured bonds in 2017. He indicated that these bonds were sold out in 2010 and 2011 and as far back as 2007 and were due to be matured by 2017. He stressed that the current administration used $ 200 million from the Sinking Fund to pay the final installment of the Sovereign Bond contracted by the Kuffour Administration.

“There are things that we did for example self-financing…which we used to construct terminal three (3) of the Kotoka International Airport. It is not a pressure on the central government to rely on the taxpayers to construct every commercial or non-commercial project. Those that can pay for themselves have to pay for themselves”.
Mr. Seth Terkper

The former Finance Minister’s remarks followed the President’s assurance to Ghanaians of a speedy economic recovery after the country has endured so much hardship in the last couple of years. With the current economic status of individuals, it is only practical to speculate that the country is far from an economic recovery in whatever form any time soon.