Ghana is looking to draw up a GHC 6.37 Bn supplementary budget and a staggering GHC 6.15 Bn from that amount (approximately 96.6 percent) will be used to pay debts.
Ghana’s Minister for Finance, Ken Ofori-Atta has asked the country’s Parliament to give the all-clear on a supplementary budget worth GHC 6.37 Bn (USD 1.18 Bn) for the 2019 fiscal year.
The request was made by the minister during yesterday’s plenary session where he presented the mid-year budget review.
The purpose of the additional funds have been subject to so much of debate lately but analysis of the mid-year budget indicates that more than GHC 6.15 Bn (USD 1.14) — a good 96.6 percent of the total supplementary budget — will be used to offset various debts.
The analysis reveals that what the government has set aside for amortisation — which is the process of reducing or paying off debt with regular payments — in the 2019 budget, has risen to GHC 10.53 Bn; up from the GHC 5.33 Bn that was initially proposed.
At the same time, a sum of money amounting to around GHC 952.7 Mn will be spent on interest payments on the government’s debt out of the GHC 1.17 Bn which is the increased figure for the government’s total expenditure for 2019.
This would imply that the amount to be doled out on debt servicing/interest payments in the revised 2019 budget is now in the region of GHC 6.15 Bn, accounting for over 96 percent of the supplementary budget presented to Parliament by Ghana’s Finance Minister who explained that the increase in amortisation by the present government has become necessary because of the power purchasing agreements that it inherited from the previous administration.
“The crystallisation of energy sector contingent liabilities in respect of take-or-pay contract obligations with Independent Power Producers (IPPs) estimated at GHC 5.1 Bn for 2019 is being amortised, thus increasing the requirements for external amortisation above the amount originally provisioned for in the 2019 Budget,” said Mr. Ofori-Atta, who urged lawmakers to give the okay on this addendum measure.
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