Public debt of 72 trillion cedis is alarming - ISODEC
Public debt of 72 trillion cedis is alarming - ISODEC Website
The Centre for Budget Advocacy (CBA) has described as alarming Ghana's public debt of about 7.2 billion dollars (72 trillion cedis), despite the huge inflow of resources as a result of debt relief under the Highly Indebted Poor Country Initiatives (HIPIC) benefits. The CBA noted that the marginal reduction of public debt from 7.5 billion (75 trillion cedis) in 2000 as stated in the 2001 budget statement to only 7.2 billion dollars (72 trillion cedis) by December 2007 in the 2008 budget is strange. The CBA cautioned that; "If we do not manage our debt stock very well, we will soon have to be spending a huge chunk of the public resources on debt servicing leaving very little for poverty related expenditures." Addressing a press conference to highlight the Centre's position on 2008 budget, Mr Nicholas Adamtey, Acting Coordinator for CBA of the Integrated Social Development Centre (ISODEC) said the rate at which the country was incurring budget deficits it was likely to lead the country into fiscal indiscipline and mounting public debt. Mr Adamtey said the government's deficit for 2006 was as high as 7.8 percent of the Gross Domestic Product (GDP), with a targeted domestic financing of the budget fixed at a net borrowing of 0.2 percent of the GDP but this has worsened to 4.1 percent of GDP. He said the domestic primary balance has been in surplus between 1994 and 2005 and worsened in 2006 sliding into a deficit of 4.9 percent of GDP. The CBA also described the current tax regime, including the Value Added Tax (VAT) as repressive, in the sense that the poor pays more than the rich. He urged government to shift emphasis from the current regressive tax regime to a progressive regime, where the rich pays more, including taxing luxury goods imported into the country. The Centre said Ghana was standing at a threshold of generating enough domestic resources to meet the nation's expenditure requirements without falling on donors to supplement government's fiscal budget. He attributed the bane of revenue mobilization to the leakage in tax collection system and entreated government to take appropriate action to plug the leakage to ensure transparency in tax administration and called for closer collaboration among tax collecting agencies. On the District Assembly Common Fund (DACF), the CBA said the total national revenue disbursed to DACF in 2006 was below the Constitutional quota of 7.5 percent. The CBA therefore called on government to go by the stipulated percentage to enable proper development to take place at the local level.