Home Ghana News Dr. Mahamudu Bawumia Blames Mahama’s Policies For Ghana’s Current Economic Crisis

Dr. Mahamudu Bawumia Blames Mahama’s Policies For Ghana’s Current Economic Crisis

by News Reporter
2 mins read

Ghana’s Vice President Dr. Mahamudu Bawumia has blamed the former president’s, John Mahama, administration for the economic crisis in the country currently.

Speaking at a public lecture in Accra, Bawumia stated that some policies of the previous government are to be blamed for the current IMF bailout the country is seeking.

Bawumia also said that the banking sector clean up and take-and-pay contracts in the energy sector is from the previous government and this contributes to Ghana’s current economic challenges.

He further said due to banking sector clean-up and the energy sector capacity payment, Covid-19 pandemic pushed the country’s total debt to around $54.5 billion.

Some commentators and analysis have argued that Covid-19 expenditures by government alone cannot be the cause of the large increase in the fiscal deficit and debt shock. In fact, they are right. Covid-19 expenditures alone are not the reason for the large increase in Ghana’s debt stock. In addition to covid-19, there are two others that are critical in understanding the evolution of fiscal deficit and debt stock. They are the banking sector clean-up and the energy sector excess capacity payment.

The excess capacity payment of GH cedis 17 billion relates to a legacy of take or pay contracts that saddled our economy with annual excess capacity charges of close to $ 1 billion a year. These were basically contracted to supply energy to Ghana.

To put these three expenditures in context, we have to juxtapose them with some of the governments flagship projects. The Free SHS, the 1D1F, Planting for Food and Jobs, the Ghana Card, Zongo Development Fund, NABCO, Teacher Training Allowance, and Nursing Training Allowance. The data shows that the expenditure on these programmes over a 5-year period amounted to GH cedis 15.6 billion. And this is compared to the GH cedis 54 billion expenditure on the three exceptional items.

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