The Vice President Dr. Mahamudu Bawumia on Tuesday, February 11, 2020, speaking at a town hall meeting in Kumasi said the pace at which the country’s public debt is rising has slowed down under the Akufo-Addo administration.
He further stated that the Akufo-Addo government is the first to have achieved that feat since 2008. Citi Business News digs into the public debt data to find out whether it supports the statement made by the Vice President.
Bawumia: “Total public debt has increased from GHC122 billion in 2016 to GHC214 billion (62.2% 0f GDP) at the end of November 2019 (including the cost of the banking sector clean-up). Excluding the cost of the banking sector cleanup, the debt stock stands at GHC 203 billion (59.16% of GDP).
Fact check: According to the Annual Debt Management Report, 2016, prepared by the Finance Minister and submitted to Parliament, Ghana’s total public debt at close of 2016 stood at GH¢122.2 billion – with the external debt component comprising of GH¢68.8 billion and the domestic component, GH¢53.4 billion.ADVERTISEMENT
The latest public debt figure as published by the Bank of Ghana in its Summary of Economic and Financial Data – January 2020, shows that the country owes a total of GH¢214.9 billion which is 62.1 percent of GDP. This debt without the GH¢10.7 billion financial sector bailout brings the debt to GH¢204.2 billion, which is 59 percent of GDP.
Verdict: Dr. Bawumia’s data is largely correct, except that he approximates the figures. Also, there is a bit of disparity when one assesses the public debt without the cost of the financial sector clean-up. The BoG’s data showed that so far GH¢10.7 billion has been spent on the clean-up, while Bawumia’s data puts that figure at GH¢11 billion.
The reason for the disparity is not immediately known, but considering the fact that other figures far higher than GH¢11 billion have been mentioned for the clean-up costs, there are no surprises here.
Bawumia: “The strong fiscal adjustment and better debt management has meant that the rate of debt accumulation has slowed down considerably to the lowest in the last decade. Between 2008 and 2012, Ghana’s debt stock increased by 267%. Between 2012 and 2016, the increase was 243% but between 2016 and 2019 the increase has been 76% (including the cost of the banking sector cleanup).”
Fact check: According to the Bank of Ghana, the country’s public debt was GH¢9.7 billion in 2008. This figure rose to GH¢36 billion in 2012. The increase represents a 271 percent jump in the four-year period.
The public debt jumped from GH¢36 billion in 2012 to GH¢122.3 in 2016, an increase of 239.7 percent.
As at November 2019, the latest public debt figure stood at GH¢214.9 billion, which means the rate of debt accumulation under Akufo-Addo is 75.7 percent.
Verdict: The rate of debt accumulation between 2008 and 2012 using the BoG data, from our checks is higher than the figure quoted by the Vice President. While Bawumia quoted 267 percent, the BoG data showed an increase of 271 percent under the Mills/Mahama administration.
Under the Mahama administration which was 2012-2016, our checks revealed that the debt grew at a rate of 239 percent as against the 243 percent the Vice President quoted.
Since the Akufo-Addo government took office in 2017, it has added GH¢92.6 billion (including the banking sector clean-up) bringing the public debt to GH¢214.9 billion as at November 2019. The rate of increase over the three year period is 75.7 percent as against the 76 percent growth the Vice President quoted.
As it stands, the Akufo-Addo rate of debt accumulation is the best in the period under review. Although it must be stated that Akufo-Addo’s record spans a 2-year 11 months period as against other regimes which completed the 4-year terms.
But the data from the Bank of Ghana shows that the Akufo-Addo regime is adding about GH¢30 billion annually to the public debt – a figure when sustained this year would still make the regime the best to have achieved the slowest debt rate accumulation in the last four years.