Ghana’s debt to GDP ratio as at December 31, 2016, Monday, August 13, 2018, became the subject of controversy when the Chairman of the Public Accounts Committee (PAC), Hon. James Klutse Avedzi, confronted a deputy Minister of Finance, Hon. Abena Osei Asare over the country’s true public debt.
The Minister for Finance, Ken Ofori-Atta in his 2017 budget presentation to Parliament puts the country’s total public debt at GH¢122 billion.
However, the Controller and Accountant General in the 2016 Auditor-General’s report for the consolidated fund puts the figure at GH¢120 billion, contradicting what was earlier announced by the Finance Minister.
In his bid to reconcile the figures, the PAC Chair sought clarification from the deputy Finance Minister by pointing out the discrepancy and accused Mr. Ofori-Atta for deceiving Parliament.
But Hon. Osei Asare in refuted the claims saying that Mr. Ofori-Atta used the exchange at that time to arrive at GH¢122billion.
Below are some excerpts from the PAC sitting:
PAC Chair: Domestic debt is GH¢52.179 billion and external is GH¢68.149 billion. The two put together will give you GH¢120.3billion. My question to the deputy minister – your minister came to Parliament to say that government’s total debt to GDP is GH¢122billion as at December 2016, why?
Deputy Finance Minister: Yes our Minister confirmed GH¢122bilion which is about 73.1%. Now there is a difference here of GH¢2 billion.
PAC Chair: The accounts of the Controller and Accountant-General confirmed GH¢120billion and the auditor also verified and confirmed that figure. My question is why did your minister say GH¢122billion when the actual debt is GH¢120billion?
Deputy Finance Minister: You know that a lot of these debts are foreign based or denominated and so these exchange rates differ. My minister reported this in March 2017 based on the current exchange rate at that time.
PAC Chair: I agree that he reported it in March 2017 but the reference point wasn’t in March 2017. The reference point was in December 2016 and there was an exchange rate as at December 2016, why?
Deputy Finance Minister: Hon. Chairman, as far as I know the difference had to do with the exchange rate.
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PAC Chair: My dear sister you are not answering my question. I’m saying that reference point is December 2016 not March 2017. Did your minister use the exchange rate as at March 2017 to represent the figure as at December 2016? Is that what he did?
Deputy Finance Minister: Mr. Chairman, this was as at 31 December 2016. My minister’s statement came in March 2017. So, certainly he used the exchange rate …
PAC Chair: I just want you to confirm if your minister used the March 2017 exchange rate to represent 31 December debt and converted it.
Deputy Finance Minister: Hon. Chair, anytime you are quoting your current liabilities, you need to quote it at the current rate. Certainly, Ghana took some loans way back in 1999. We cannot use the exchange rate of 1999 when we are talking about that loan and making some repayment. So, certainly he will use the current exchange rate. And as you also confirmed that most of these debts here were external loan. So certainly if you use the existing exchange rate, the figures might go up or down but that notwithstanding, it remains the same that our debt to GDP ratio was high.
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PAC Chair: I agree with you that the external portion of the debt must be converted into Cedis and exchange rate must be used at a point and the Controller and Accountant-General used the exchange rate as December 31, 2016. That is how he arrived at GH¢120billion as debt. Now your minister decides to use the current exchange rate at the time which is March 2017 and misrepresented to Parliament that the debt as at December 2016 was so much. The minister could have just done the exact thing by saying that by using the exchange rate as at December 2016, this should have been the debt GH¢120billion but as at the time of presenting the budget in March 2017, if you use the current exchange rate, it will be GH¢122billion and that is the answer he should have given. He didn’t do that.
Deputy Finance Minister: Hon. Chairman, certainly any day anytime when you are stating a loan, you state its current value and that is exactly what my minister did. My minister did not come to misrepresent issues on the floor of Parliament. He was current because when you are stating your debt, it has to be current.
PAC Chair: Alright let’s go on. You’re trying your best but let’s go on.
Deputy Finance Minister: No, I am just stating the fact as it is, Hon. chairman.