Finance Minister, Mr. Seth Tekper has said that the idea of borrowing is to help countries to invest those monies into developmental projects that will help generate resources to re-finance the loan.
He said, ‘’first it takes time to bring the resources on a monthly, daily and annual basis, so you will not get all the money you need, and therefore the reason why you borrow is to help you do your factory, you borrow to do your plants, you borrow to do your road in other that when that same natural resource come on stream, you convince the market that you will be able to re-pay.’’
According to the minister, Ghana has a plan for our debt management strategy and therefore it will be improper for people to presume that we are just borrowing without any plan.
‘’For as longs as a developing country we have a deficit and even countries that have surplus go to the market to borrow and I think that Ghana is no exception. Often we say this is as if without reservation we borrow but we have shown our debt management strategy, we have also shown the potential for the country. So we are not showing defiance in saying that Ghana we borrow but we saying that Ghana if it’s borrow should borrow and emulate countries that borrow for development and don’t run into trouble and that is all we are saying,’’ he said.
Mr. Tekper indicated that countries like Nigeria, Kenya and others are doing same and therefore Ghana should not be seen as a country that borrowing unnecessarily rather we are borrowing to finance development projects.
He reiterated that the $1 billion we borrowed is for ‘’refinancing of debt which we would have refinanced on the domestic market because we are not able to pay them immediately. By borrowing and extending the tenure beyond three years, it gives us the time to re-pay that loan to programme and stop the tendency to borrow in bullets so the time comes and you are not are able to pay.’’
Mr. Seth Tekper in an address to the media last Friday explained that as part of the debt management strategy, every existing projects that may benefit from the loan may have to generate revenue to re-pay its own loans in the future.
Relations to agric and other Sectors
Mr. Seth Tekper indicated that the loan will also be used to re-finance existing loans that was used to finance projects and plans including that of the agric sector.
''The budget we prepared has benefit sectors, so you have ministry of agric, ministry of education and all other sector ministry. I you have a deficit that deficits is there to benefit the ministry of agric and therefore if you borrow to re-finance you are re-financing debt that was taken originally to finance an agric project maybe to pay subsidy for farmers fertilizer, to develop irrigation because irrigation plans are a prime example of what you take a loan to invest in because they last a long time. All plans by government which resulted in the debt we re-financing the original budget would have re-financed those project but it comes a point are we able to use the agric project to pay the loan that was taken and that is the crucial which is facing us today and that is what is our new debt management strategy,'' he said.
The minister stressed that as part of the debt management strategy and policies, the tax payer will not be burdened to pay for government loans rather the projects for which the loans were taken must re-finance the loans.
''We have projects and yet still non of these monies is coming to re-pay the loans and the tax payer is been asked to pay, what is that money been used for. salaries? If we borrow to put equipment in the hospitals and pay a fee for that equipment , should all the monies be used as IGF by the hospital or should part of those fees come back so that we can at least revolving fund to service the the facility? What happens is that the maintenance of that facility come back to the budget and yet fees are been collected, this the new thinking we talking about and this what middle income countries do,'' he added.