Dr Owusu Sarkodie, an economist at the Institute of Fiscal Studies, has defended borrowings made by the government to fight against the Covid-19 pandemic as well as its request for an additional GH¢ 11.8 billion budget funding.
The Finance Minister, Ken Ofori-Atta, presenting the 2020 Mid-Year Budget Review and supplementary estimate to Parliament on Thursday, demanded that Parliament approves for government spending an additional GH¢ 11.8 billion to the already GH7 98 billion approved 2020 budget expenditure.
The additional monies, aside the old borrowings and some new borrowings to be made by government (for instance in the GHS 100 billion Ghana CARES development programme where government is to borrow over 70 per cent of the amount from the private sector – both foreign and domestic), according to the Finance Minister, are necessitated by the shortfall in revenue generation and increased expenditure of government as a result of the pandemic.
The Minister’s demand seems to have angered the Minority Caucus in Parliament. The Minority, thus, contested against the request in its media interaction after the presentation of the budget.
They argued that the country’s public debt was ballooning and that the new borrowings will further worsen the debt sustainability of the country. They also questioned the government’s need for additional GH¢11.8 billion budget funding.
But, speaking in an interview on Adom FM’s Dwaso Nsem on Friday, Dr Sarkodie noted that, although the concerns raised by the Minority about the ballooning nature of the public debt is genuine, there is no other option than for the government to continue borrowing.
“I have always spoken against excessive borrowing and I agree with the Minority on the fact that the public debt is increasing, but you see, the period in which we are makes it necessary. For now, the best thing to do is to borrow to help fix the economy, this is the time to borrow because everyone in the world is borrowing,” he noted.