Once a country runs a budget deficit, it is impossible to avoid borrowing, whether the monies come from abroad or from the local market.
Finance lecturer at the University of Ghana, Godfred Bokpin, who espoused this, used it to defend government’s borrowing.
Prof. Bokpin said the 2017 budget, “which had received Parliamentary approval,” had exceeded the country’s revenue.
“…that budget deficit is an indication of the borrowing requirement of the government,” he said; adding that the 2018 and 2019 budgets also have a deficit which must be financed.
According to him, the problem is not with the current administration alone.
He told Samson Lardy Anyenini on Joy FM/MultiTV’s Newsfile Saturday, that “our revenue envelope has remained dwarf since independence.”
With his explanation, the lecturer concluded that “there is no government that can manage this economy without borrowing.”
“It is impossible,” he stressed.
The debt of Ghana in 2016, was GH¢122 billion which has increased under President Akufo-Addo to GH¢173 billion in 2019.
Bokpin was reacting to the increasing nominal debt which was part of fallouts from the two economic forums held by the government and the erstwhile administration this week.
But the lecturer said it is only the nominal figure which has increased under the Akufo-Addo administration.
“The rate of debt is going down,” he said, crediting part of it to the IMF which came-in in 2015.
Giving more credit to the Akufo-Addo administration, Prof. Bokpin said if the cost of the banking sector clean-up, GH¢12 billion, is taken out, “the rate of debt accumulation is going down.”
He also dismissed critics of the clean-up. According to him, the cost of not undertaking the clean-up would have been detrimental to the entire financial sector.
Bokpin reiterated earlier, comments he made that comparing figures of the opposition National Democratic Congress (NDC) and that of the governing New Patriotic Party (NPP), the later has been better managers of the economy.