The Member of Parliament for Walewale, Dr Tiah Abdul-Kabiru Mahama, has criticised the government’s apparent readiness to return to the domestic bond market, arguing that the move contradicts its claims of fiscal discipline and expenditure control.
His remarks follow an announcement by the Ministry of Finance (Ghana) that restrictions on new domestic bond issuance have expired. The announcement was published by the Finance Minister, Cassiel Ato Forson, on his social media platforms.
Speaking on Newsfile on JoyNews on Saturday, March 7, Dr Mahama argued that the government’s borrowing intentions raise questions about its commitment to reducing public expenditure.
“This government has spent more money than any other government in the fiscal year. That’s also a fact,” he said.
“To what end are your cost-reduction measures when they do not reduce your budget spending? It basically means that you are starving some areas and putting money into other areas that are probably not relevant.”
Dr Mahama noted that successive governments have historically justified borrowing on the basis that it finances development and strengthens the productive sectors of the economy.
“Every government justifies borrowing by anchoring it on the fact that we need to invest in the productive sector and improve our infrastructure base, which then forms the basis for economic growth,” he said.
“That has always been the reason. It has always been the mantra used to justify borrowing.”
However, he argued that the current administration had previously criticised borrowing by the former government and questioned its motives for now signalling a return to the bond market.
According to him, the previous administration led by the New Patriotic Party (NPP) undertook extensive infrastructure development across the country, financed partly through borrowing.
“We saw massive and monumental infrastructure development under the NPP government across the country,” he said.
“Every region had its fair share. When you followed the development tracker, there were statistics showing projects ongoing in almost every district.”
Dr Mahama said the government’s announcement sends a clear signal that it intends to resume borrowing from the domestic bond market after relying heavily on short-term instruments such as treasury bills.
“One message they are telling us is that they are ready to go back to the bond market,” he said.
“Secondly, they are saying they have been too dependent on the short-term end of the market—treasury bills—and now want to move away from that.”
However, he argued that publicly indicating such intentions contradicts the government’s narrative of fiscal prudence.
“If you decide to borrow, you are basically telling us that you don’t want to live within your means,” he said.
“When you signal to the market that you want to borrow, you are also telling us that the domestic revenue you are generating is not sufficient to support the projects and commitments you have undertaken.”
Dr Mahama also questioned what he described as the government’s belief that there is adequate fiscal space to accommodate new borrowing.
According to him, the perception may be misleading because certain macroeconomic indicators may not accurately reflect the underlying economic conditions.
“One of the reasons why I think the fiscal space they are talking about is fictitious is because the currency has been overvalued,” he said.
He claimed that significant foreign exchange injections into the economy have artificially strengthened the Ghanaian cedi, thereby affecting calculations of the country’s debt-to-GDP ratio.
“You are creating a false strength of the cedi, and that translates into your debt-to-GDP appearing lower than it would otherwise be,” he argued.
Dr Mahama also addressed criticism of the Domestic Debt Exchange Programme introduced under the previous administration, insisting that the current government is benefiting from the fiscal relief created by the policy.
“The fruits of the Debt Exchange Programme created fiscal space,” he said.
“Our debt obligations were pushed into the future, meaning that for much of 2025 and 2026 certain repayments are not due.”
He described the programme as a painful but necessary measure taken in the national interest, even though it imposed hardship on citizens.
“Just like the Structural Adjustment Programmes in the 1980s and 1990s, people opposed them, but they were necessary steps that helped stabilise the economy.”
The Walewale MP also pointed to Ghana’s programme with the International Monetary Fund (IMF), which imposed strict borrowing limits as part of efforts to restore debt sustainability.
He explained that the IMF placed restrictions on new borrowing because Ghana’s debt had reached unsustainable levels.
“The IMF imposed conditionalities to ensure that government lived within its means and did not borrow excessively while receiving support,” he said.
According to him, those restrictions included limits on the amount of additional debt the government could accumulate annually.
Dr Mahama cautioned that rushing back into the bond market could expose the country to renewed fiscal risks, particularly if government revenues fail to meet projections.
“If your revenue is not performing and you rush to borrow, you risk throwing yourself back into a debt trap,” he warned.
He also argued that recent improvements in macroeconomic indicators may not reflect deeper structural reforms in the economy.
“The positive changes we are seeing are not based on structural transformation,” he said.
“They are largely attempts to address the symptoms rather than the underlying issues within the economy.”
While acknowledging that borrowing may sometimes be necessary to finance development, Dr Mahama urged the government to proceed cautiously.
“I am not saying government should not borrow,” he clarified.
“Government will have to finance development activities, but the borrowing must be directed towards productive sectors and infrastructure that will strengthen the economy in the long term.”
He warned that without careful planning, additional borrowing could end up financing existing obligations rather than driving meaningful economic growth.
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Source: www.myjoyonline.com