Excessive Borrowing Government Damns IEA’s Verdict On Economy

Government has rejected claims by the Institute of Economic Affairs' verdict about excessive borrowing which it predicted could collapse the economy.

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The government in a statement signed by Finance Minister Seth Tekper, said the economy is on a sound footing, but it is a matter of time before Ghanaians will reap the benefits of measures being implemented now.

The Minister maintained that the IEA’s claims contained “general and sweeping assertions”.

The Institute of Economic Affairs (IEA) believes the NDC government is over borrowing and that could spell doom for the young oil-producing nation.

In a sharp rebuttal, the Minister said “All nations borrow for major capital or infrastructure development; therefore, the current focus of Government Policy is on “smart-borrowing” to sustain Ghana’s growth and development—without unduly increasing “pure” public debt,” Mr. Seth Terkper stated.

“The cocoa sector also looks very promising as well as the prospects of the import substitution measures being implemented in the rice, poultry and pharmaceutical subsectors in line with President Mahama’s transformation agenda.

“Should we continue on this path, our national debt will grow to about 70% of GDP by 2016 and close to 100% by 2020, returning our nation to where it was some thirty years ago, at the brink of financial collapse,” the IEA said in a statement last week.

“Ghanaians should require the adoption of fiscal policy rules with ceilings on annual fiscal deficits,” it added.

However, the Finance Minister Seth Terkper has downplayed that argument, insisting the policy think-thank failed to look at the other side of the coin.

“We therefore disagree with the IEA’s dire projection of a debt/GDP ratio that does not take account of potential rapid GDP growth and the new debt management policy.

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