The fear has been occasioned by the tight financing conditions facing the Mahama government as a result of challenges with revenue mobilization, a development the Fund says could result in some overruns in the coming weeks, as the December 7 elections inch closer.
The Fund expressed the fear in its Staff Report to the Executive Board requesting it to pass Ghana’s performance under the third review of the bail-out programme with the Ghanaian government.
“In the context of a much higher public debt level, a replay of the past spending splurges in election years would greatly heighten the risk of a full-blown economic and financial crisis and undermine Ghana’s development progress," the Report said.
The Ministry of Finance's own budgeting guidelines for MDAs prepared for 2017-2019 show how dire the situation is. 60 billion Ghana Cedis (GH¢60,293,080,078) out of the resource allocated for 2017, 2018 and 2019 will be used to service the nation’s debt.
For 2017, the NDC government has already provisioned a total of GH¢34 billion for MDAs. The total resource envelope for 2017 is ¢56,689,811,909. Out of this GH ¢56,689,811,909, salaries and wages will be allocated GH¢15.6 billion (15,604,905,129).
Payment of debts will be GHC¢17.55 billion, some GH¢11,178,409,057 for interest payments and GH¢6,371,656,454 for loan repayments and GH¢1.9 billion to settle non-road arrears alone. This means the government will be left with less than GH¢3 billion, to be precise, GH¢2,903,499,974, to spend.
The GH¢3 billion left will be expected to take care of the following: GH¢11.77 billion on grants to other government units; GH¢6.6 billion must be spent on capital expenditure; GH¢2 billion on goods and services for MDAs; GH¢1 billion on tax refund; GH¢83.5 million on social benefits; GH¢50 million on subsidies, which the election-time ONLY ‘Social Democratic’ government says it intends to use to cushion the hardships it has imposed. These items come up to a total of GH¢23.7 billion.
Out of the GH¢2.9 billion left over, the Government will have to spend GH¢23.7 billion on all the other things in the Budget.
The 121-page IMF Report maintains that Ghana’s risk of debt distress remains high under the Updated Debt Sustainability Analysis (DSA), with two relevant debt indicators breaching the thresholds under the baseline.
The Report also painted a bad good picture of the country’s banking sector when it comes to quality of assets.
It disclosed that non-performing loan ratio increased to 18.8 percent in June 2016 from 11.2 percent a year earlier, reflecting the lagged impact of exchange rate depreciation and disruptions to energy supply.