The Chairman of Parliament’s Public Accounts Committee (PAC) has described Finance Minister Seth Terkper’s often drummed up “smart borrowing” mantra as among a cluster of missteps that are drawing the country to a precipice.
Kwaku Agyemang-Manu does not understand why the Finance Minister is pushing for the establishment of an EXIM Bank with the Export Development and Investment Fund (EDIF) when important issues like the power crisis continue to cripple the economy.
“What are our immediate challenges as a country?…Look at the Dumsor situation. We prefer putting it [oil money] into infrastructure fund to using that money immediately to solve our electricity and energy challenges? What are our priorities? Look at the hardships that have been unleashed on Ghanaians. Are they trying to bring in measures to mitigate [the economic hardships], generate growth for us so that the problems we are facing as Ghanaians are mitigated?, he asked.
The PAC Chair and the Finance Minister, Seth Terkper, were speaking on Joy FM’s the Super Morning Show Wednesday on issues concerning the government’s Supplementary Budget presented to Parliament by Mr Terkper on Tuesday.
Mr Terkper had pointed out that as part of government’s smart borrowing initiatives, an EXIM bank has been earmarked with EDIF’s concessional loans to reduce the stress on government debts and keep the local currency stable.
According to Mr Terkper, the proposed EXIM banks would provide credit to cocoa farmers, exporters and other SMEs or guarantee such credit at reasonable interest rates in a bid to support the private sector.
“The thing about EXIM banks and their ability to support export is that it is the hard currency which the exporter earns which would be used to facilitate the loan”, Mr Terpker said adding this initiative will compliment Bank of Ghana’s structural measures to keep the cedi robust in the long term.
“This is not wishful thinking. These are what other countries have done…these are what Asian countries did to become economic powers”, Mr Terkper underscored.
These explanations by the Finance Minister notwithstanding, the PAC Chair insisted the government is doing a poor job at managing the economy and has plunged the country into an “unnecessary debt crisis”.
An unimpressed Agyemang-Manu asked: “What is more responsible than envisioning that you are going to lift oil and you start projects intending to use oil revenues to pay for them without borrowing and leveraging your oil revenue?
“We borrowed one billion in 2007…or thereabouts and we knew we were going to lift oil two years thereafter, so couldn’t we have paid with all the oil revenues? They [government] are mortgaging to the Chinese loan that we can never accessed…now we can’t even talk about our oil”.
He said borrowing, whichever form it takes, is not a prudent recommendation to heal the country’s economy back to life.
The Minister revealed during this year’s Mid-Year Review cum Supplementary Budget Estimates in Parliament on Tuesday that Ghana’s expected economic growth of 3.9 percent for 2015 cannot be met.
He said the country’s overall real GDP growth has now been revised downward to 3.5 percent.