The Ghanaian government will use 96% of its supplementary budget to pay debts

The Finance Minister Ken Ofori-Atta has asked Parliament to approve GH¢6.37 billion as the supplementary budget for the 2019 fiscal year.

Finance Minister, Ken Ofori-Atta

He made this request on Monday, July 29, 2019, when he presented the mid-year budget review.

Many have asked what the additional funds will be used for. But analysis of the mid-year budget has shown that more than GHC6.15 billion, representing 96.6% of the supplementary budget, will be used to pay debts.

The analysis reveals that government’s provision for amortisation — which is the process of reducing or paying off debt with regular payments — in the 2019 budget, has shot up to GHC10.53 billion from the planned GHC5.33 billion.

Meanwhile, GHC952.7 million will be spent on interest payments on the government’s debt out of the GHC1.17 billion increase in the government’s total expenditure for 2019.

This means that the amount to be spent on debt servicing/interest payments in the revised 2019 budget is GHC6.15 billion representing. This is 96.6% of the supplementary budget the Finance Minister had requested from Parliament.

Mr Ofori-Atta explained that the increase in government’s amortisation has become necessary because of the power purchasing agreements that it inherited from the Mahama administration.

“The crystallisation of energy sector contingent liabilities in respect of take-or-pay contract obligations with Independent Power Producers (IPPs) estimated at GH¢5.1 billion for 2019 is being amortised, thus increasing the requirements for external amortisation above the amount originally provisioned for in the 2019 Budget,” the Finance Minister stated.

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