State of the Economy: Ghana’s Taxes Will Be Consumed by Debt Payments – Felix Kwakye Ofosu
Felix Kwakye Ofosu, the Minister of State in charge of Government Communications, has painted a stark picture of Ghana’s escalating debt crisis, revealing that a significant portion of national revenue will be consumed by debt servicing obligations.
Speaking on TV3’s KeyPoints on January 25, Kwakye Ofosu disclosed that Ghana recently paid $364 million in debt servicing on January 2. However, this is just the beginning of an uphill financial struggle. By the end of February, the government will need to settle a staggering $6.1 billion, and next year, debt servicing is projected to hit an alarming $180 billion.
“To put this in perspective, Ghana’s budget is just slightly above $200 billion,” Kwakye Ofosu explained. “What this means is that nearly every tax you and I pay, and the revenue generated, will go toward debt servicing. There will be very little left for anything else.”
Kwakye Ofosu warned of dire consequences should the government fail to meet its debt obligations. “Our debt default and deferral period is over. If we fail to make these payments, we risk defaulting again, and that could spell the collapse of our economy as we know it,” he cautioned.
The Minister also attributed the current crisis to the financial mismanagement of the previous administration, citing excessive borrowing without adequate repayment plans. “The former government borrowed recklessly without having the capacity to repay, leaving the country in this precarious situation,” he said.
As Ghana grapples with these challenges, Kwakye Ofosu acknowledged the immense pressure on the finance ministry, where nearly all revenue for the year is earmarked for debt servicing. To manage this overwhelming task, he suggested appointing additional deputies to support the ministry.
“Given the complexity of the situation, appointing two deputy finance ministers would be justified,” he remarked.
Despite the daunting economic realities, Kwakye Ofosu reassured Ghanaians that the government remains committed to navigating the crisis and improving accountability. “We will do what is necessary to address this situation. The government is accountable to the people of Ghana, who have entrusted us with this responsibility,” he said.
As the nation faces a critical economic turning point, Ghanaians brace for the challenging road ahead, with hope that the government’s measures will stabilize the economy.