Economist chides gov’t for blaming high debt burden on previous government
The Dean of the Business School at the University of Cape Coast (UCC) has asked the current government not to blame the current high debt burden on the previous administration.
Professor John Gatsi explained that, the nature of Ghana’s debts is such that some instruments have a maturity period of 3-30 years which means interest will be paid or is being paid on the loans over the years as the principal payment is made only at the maturity of a specific debt contract.
It is therefore false to say NPP government’s high debt is because loans were taken to pay NDC’s debt.
“What is rather true is that debts of shorter duration, say 3 years, contracted in 2015 should have been paid in full by now just as the NDC set up the sinking fund to retire maturing debts during the NPP’s regime, especially the $750m Eurobond issued by the then NPP government in 2007 and was fully amortized in April 2017.
“From the above, it should be clear that current governments will always pay part of the debt acquired by previous governments including servicing interests on previous debts. All these obligations should inform the debt management strategy of a government. No government, even if it serves two terms can claim to have solely paid the debts acquired by the previous governments.
“That would be an uninformed position to propagate. Between 2009 and 2016, the NDC could not have finished paying all the debt obligations that crystallized from President Kuffour or Rawlings’ era though the Mahama administration was smart and forward-looking to have established the sinking fund to pay off the 2007 Eurobond,” he said in a statement.