The Vice President Dr. Mahamudu Bawumia has blamed the erstwhile John Mahama administration for the economic woes the country is currently facing.
He said some policies of the previous government can be blamed for the current bailout the country is seeking from the International Monetary Fund.
Speaking at a public lecture in Accra, Dr. Bawumia said the banking sector clean up and take-and-pay contracts in the energy sector from the former Mahama government can be added to Ghana’s current problems.
Dr. Bawumia said factors such as the Covid-19 pandemic, banking sector clean-up, and the energy sector capacity payment pushed Ghana’s total debt to some $54.5 billion.
“Some commentators and analysts have argued that Covid-19 expenditures by government alone cannot be the cause of the large increase in the fiscal deficit and debt stock. In fact, they are right. Covid-19 expenditures alone are not the reason for the large increase in Ghana’s debt stock. In addition to covid-19, there are two others that are critical in understanding the evolution of fiscal deficit and debt stock. They are the banking sector clean-up and the energy sector excess capacity payment.”
“The excess capacity payment of GH¢17 billion relates to a legacy of take or pay contracts that saddled our economy with annual excess capacity charges of close to $1 billion a year. These were basically contracted to supply energy to Ghana.”
The Vice President noted that the expenditure on these three “exceptional” items is over 3 times more than what has been spent on government’s flagship programmes.
“To put these three expenditures in context, we have to juxtapose them with some of the governments flagship projects. The Free SHS, the 1D1F, Planting for Food and Jobs, the Ghana card, Zongo Development Fund, NABCO, Teacher Training Allowance, and Nursing Training allowance. The data shows that the expenditure on these programmes over a 5-year period amounted to GH¢15.6 billion. And this is compared to the GH¢54 billion expenditure on the three exceptional items.”
“Of the four factors, Covid-19 and the Russia-Ukraine war were external. The other two, the banking sector clean up and the energy sector capacity payment were results of the previous government.”