Restructure Ghana's fiscal structure - Seth Terkper to government

Former Finance Minister, Seth Terkper, has urged government to find a sustainable solution to dealing with Ghana’s fiscal structure problems as a way of avoiding similar economic situations as the country is experiencing now.

According to him, the failure of government to increase its revenues at the rate at which its expenditure has been ballooning has created the deficit that has further been exacerbated by the ongoing Ukraine war and interest rate hikes the world over.

He noted that without a plethora of avenues for funding to support the budget, undue burden is being placed on the Bank of Ghana which now supports about two-thirds of the country’s budget, a situation which was not common in the past.

Speaking on JoyNews’ PM Express Business Edition, he said, “I think it’s a mistake to do bottom-up analysis for debt because as Ken said, what gave you debt?

Before the middle of the year Bank of Ghana had to come in.

Bank of Ghana is financing 22 billion of that 37 because you cannot go and borrow any longer, this is a problem.

“Before, in the Mid-Year review Bank of Ghana was financing 22 billion.

The truth is that the Bank of Ghana has started financing two-thirds of the deficit.

And if you reckon with government documents coming out now that the arrears is understated, it means that Bank of Ghana is financing about half of 40 billion.

“This is the Bank of Ghana that came from zero financing of the budget in 2016 to 2020 and all of a sudden it came to 10 for the whole year and all of a sudden it came to 22 billion.

Where are we ending the year if Bank of Ghana goes to finance 30 billion out of, you know, because remember we’re borrowing.”

He noted that while the chief fiscal problem has to do with revenue and expenditure, another is the failure of government to pay back its loans.

According to him, the government over the years has exhausted buffer funds instead of building them up for situations like these.

He said with donor countries currently hiking their interest rates as a result of the Russia-Ukraine war, borrowing to fill the gap the country is now facing will be very expensive thus the need for a structural change.

“So I think that, you know, as Ken said, the issue is revenue and expenditure, and then also if you borrow learn to pay.

That’s a structural change.

“When you talk about structural change it means that you’re changing the structure in which you did things in the past.