Ken Ofori-Atta Wasn’t Reckless – Dr Bannor Defends Record

Development Economist Dr Frank Bannor has slammed policy analyst Dr Steve Manteaw over claims that former Finance Minister Ken Ofori-Atta was the most incompetent finance minister in Ghana’s history.

Dr Bannor dismissed the criticism as politically charged and lacking economic substance, arguing instead that Ofori-Atta’s record in the bond market proves otherwise.

Reacting to Dr Manteaw’s assertion that Ofori-Atta’s borrowing led Ghana into the Domestic Debt Exchange Programme (DDEP), Dr Bannor pointed out that under the National Democratic Congress (NDC), Ghana’s borrowing was far more damaging.

“Between 2015 and 2016, Ghana recorded its highest coupon rates of 10.75% and 9.25% respectively. What is more dangerous was the fact that the NDC was not only borrowing at a very high coupon rate but at a very short tenor!

“This is critical to debt sustainability, including the use of the fund, and every true economist understands that,” he explained in an interview on TV3.

He defended Ken Ofori-Atta’s performance with data, contrasting it with the previous administration’s borrowing record.

“The highest coupon rate ever recorded under Ken Ofori-Atta was 8.875% in April 2021. Not only was Ken borrowing at a low coupon rate, but the tenor of the bonds was mainly long-term, meaning the country would have the much-needed fiscal space to pay back!” he said.

Dr Bannor also expressed concern about what he described as the use of emotionally charged rhetoric to distort facts.

“Riding on the emotions of Ghanaians to perpetrate half-truths could be detrimental to our democratic gains as a nation! Ghana’s public debt, recorded at $8.07 billion in 2008, skyrocketed to $29.2 billion by 2016, indicating more than a threefold increase.

“This surge propelled the debt-to-GDP ratio to 73.1% by the end of 2016 (non-rebased economy),” he stated.

He further clarified that the rate of debt accumulation under the NDC government was severe.

“This reflects a growth rate of approximately 261.83% in the total public debt stock under the NDC from 2009 to 2016.

“This rate of change indicates that, on average, the NDC government added 32.75% to Ghana’s debt stock each year between 2009 and 2016.

“This trajectory was even worse between 2012 to 2016. The public debt, which stood at $15.3 billion in 2011, increased to $29.2 billion by the end of 2016, indicating a growth rate of 90.85% from 2012 to 2016.”

Addressing the issue of bonds, Dr Bannor said Ghanaians had been misinformed about how governments borrow.

“Another area Ken Ofori-Atta has been falsely accused of is borrowing via the bond market. Bonds are the major form of debt utilised by both advanced and emerging market economies worldwide.

“Bonds can be issued to either domestic or foreign creditors and may be denominated in domestic or foreign currencies.

“Eurobonds are commonly denominated in US Dollars (USD) and are typically characterised by long-term maturity periods,” he said.

In defence of Ofori-Atta’s approach, he added, “Again, contrary to public misconception, for example, part of the eurobond issued in 2018 was used to switch the 2016 eurobond issued by the NDC, which matured in 2022, with a higher coupon rate of 9.25%, with the remaining amount of $420 million lodged in the Sinking Fund for further liability management.”

Dr Steve Manteaw had earlier criticised the former minister, saying, “You mean the most incompetent finance minister in the economic history of Ghana, who’s only understanding of economic management was reckless borrowing? It is his mismanagement that led the country into the DDEP in the first place.”

He added, “The macro data have exceeded most IMF programme targets. And all it took was fiscal prudence and efficient spending. Ato toaso!!!”

Source: Liberalprint.com