The Minister of Finance and Economic Planning, Seth Terkper, has rejected claims that government’s increasing appetite for foreign loans has contributed to the mssive increase in the nation’s debt stock, but it’s rather the continuous depreciation of the cedi.

Seth Terkper while reading the mid-year review of the budget said Ghana’s debt stock as at the end of May 2015 stood at GH¢90 billion representing 67.53% of GDP.

This he said was made up of GH¢53.8 billion and GH¢36.2 billion for external and domestic debt, respectively.

He said, “Ghana’s total public debt stock, which stood at GH¢53.1 billion (US$24.5 billion) as at the end of December 2013, increased to GH¢79.6 billion (US$24.8 billion) at the end of December 2014. Of the total public debt stock, external debt was GH¢44.5 billion (US$13.9 billion) while domestic debts amounted to GH¢35.0 billion (US$10.9 billion), representing 55.96 percent and 44.04 percent of the total debt stock, respectively.”

Meanwhile, several economists including the New Patriotic Party’s (NPP) running mate, Dr. Mahamadu Bawumia had warned that government's continued borrowing is “worrying” since Ghana risk being classified as a country with a high risk of debt distress by International rating agencies following government’s continuous borrowing.

But during a joint interview with Citi Breakfast Show host, Bernard Avle and Radio Gold’s Alhassan Suhuyini on Thursday, Seth Terkper downplayed the effect of borrowing on the nation’s debt stock.

“Our debt stock increased not just because of the loans but more because of the depreciation of the cedi.”

He said, “If the cedi were stable, the rate of increase in debt stock would not have been as high as it is now.”

In another development, the Chinese government has denied the Government of Ghana a loan request to help the country execute some road projects.

The Chinese government in a letter to the Ministry of Finance explained that it turned down the loan request because the projects in question “lack financial benefits.”

The Chinese said after studying the documents for the above projects, they advised the Ghana government, “the Chinese Government Concessional Loan and Preferential Buyer Credit are mainly directed towards projects with good financial benefits and repayment abilities.”

They further stated that according to relevant documents available to them, the “three road projects lack financial benefits, thus it appears that it’s not appropriate to utilize a Chinese concessionary loan to implement these projects. Otherwise, it may increase the debt burden of your country.”

Source: citifmonline

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