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The next National Democratic Congress (NDC) government will re-establish the sinking fund to retire any upcoming debt obligation to address Ghana’s debt crises, the party’s presidential candidate, John Dramani Mahama, has said.
Tied to this plan is a decision to renegotiate the IMF debt exchange programme to restructure the country’s debt profile since it was not feasible to service the current profile.
He outlined these strategies when he took his seat at the GTV presidential encounter series last Friday (Nov 29).
Touching on how to finance the sinking fund he said his government will utilise the Petroleum Revenue Management Act, 2011 (ACT 815) for that purpose.
ACT 815 outlines how petroleum revenues should be divided, including the Heritage Fund, Stabilisation Fund and the Annual Budget Funding Amount (ABFA).
Mr Mahama said that instead of having 70 per cent of the petroleum revenue going to the Ghana National Petroleum Commission (GNPA) for use, the government would set up a separate account to hold the ABFA funds, and only release the money to GNPC for its core activities.
By doing so, he said any savings from this process would then be put into the sinking fund.
“If you look at the way GNPC has been spending money on useless things. I think that we must look at that again. We should just not give them that huge money and let them just keep it in its account and just use it for whatever they want,” he said.
Mr Mahama explained that the current debt programme was not sustainable, adding that it could lead to another debt default in 2026 which would be “more serious” than the current situation.
“We were not part of the negotiation and so we didn't have anything to do with the profile that has emerged. But everybody will tell you that there's a problem with the debt profile.
“There are two humps, one in 2026 and then another one in 2027, we are required to pay GH¢182 billion. You know how much the total government budget is. It is just over one GH¢70 billion.
So in one year, the government is supposed to use this whole budget to service a debt. It is not feasible, and so we believe that there should be a negotiation that will flatten and streamline it,” he said.
As a result of that, he disclosed that the first 90 days in office would be devoted to open dialogue and transparency with Ghanaian stakeholders about the true state of the economy and debt situation.
After the engagement, he said the government would then proceed to renegotiate the terms with creditors, while also increasing transparency and domestic buy-in, in order to restructure the debt profile in a way that would be more manageable for Ghana's fiscal situation.
On taxes, Mr Mahama said that rather than just piling on more taxes, his government would scarp taxes such as the E-levy, among others, and, instead focus on rationalising and simplifying the tax system to make it more transparent and fair.
He pointed out inconsistencies where some businesses in the same market were charged different VAT rates, leading to distortions and evasion, adding, “The plan is to make the tax system more equitable and easier to comply with”.
That, he said, would increase tax revenues by bringing more people into the formal tax net.
On education, Mr Mahama said he would work to cancel the double track system for all children to attend school together.
On how to tackle illegal mining, the presidential candidate explained that he would address the menace by introducing a reclamation bond to small scale miners and holding concession owners who give out their lands for illegal mining accountable.
Mr Mahama called on the media, police and others voting on Monday, Dec 2, to set the ball rolling by voting for change.
“Don’t sit on the fence; Ghanaians have given you a penalty to score the goal of change so that they (Ghanaians) will follow on December 7,” he added.
