The Vice-Presidential candidate of the NPP, Dr. Mahamudu Bawumia says the President John Mahama led administration is responsible for 90% of Ghana’s total debt.
Comparing the economy under the previous NPP government and the current NDC government Dr Mahamudu Bawumia said: “about 90% of Ghana's debt since independence has been accumulated under the NDC government.”
He denied President Mahama’s assertion that 41% of Ghana’s current debt was accumulated by the NPP since independence. “I really couldn’t believe my ears. I thought I misheard. To be mild this is not true.”
Explaining further Bawumia noted that by 2008 Ghana’s total debt was 9.5billion Ghana cedis. In the last seven years under NDC it is now 99 billion Ghana cedis. “About 45billion of this is domestic debt.”
“Take the following example. Assume that today the exchange rate of the cedi to the dollar is 1:1. If you borrow GHC100 today, it would mean that you have borrowed the equivalent of $100 dollars and you should be able to do projects worth $100. In a few years’ time if the exchange rate depreciates to 4 cedis to one dollar, then the 100 cedis you borrowed a few years ago would be worth some $25 today. This does not however mean that you did not borrow the equivalent of a $100 dollars initially and we should expect to see a $100 worth of projects. You cannot suddenly claim that you actually borrowed $25 a few years ago and so you are only to account for $25 worth of projects. Using current exchange rates in determining the equivalent amount borrowed in the past is misleading because it ignores the value of the debt at the time it was borrowed. Using current exchange rates would underestimate the value of the borrowing because of exchange rate depreciation. We are here concerned about the value of the projects that could have been financed at the time the money was borrowed.
“Contrary to what the government will have us believe, exchange rate depreciation has rather reduced the book value of Ghana’s debt in dollar terms. So that even though government has borrowed the equivalent of $37 billion in 7 years, the book value of the debt would be some $26 billion (GHC 99 billion) by the end of 2015. It is important to understand this point because it appears that this government does not," he opined