The Director of the Institute of Statistical, Social and Economic Research (ISSER), Professor Peter Quartey, has called on the government to adopt a more cautious and strategic approach to borrowing, particularly in light of Ghana’s recent debt restructuring efforts.
Delivering his inaugural lecture at the Ghana Academy of Arts and Sciences on the theme *“Debt, Investment, and Growth in Ghana: Did We Borrow to Consume?”*, Professor Quartey warned against a premature return to the international capital market, emphasizing that over-reliance on Eurobonds and external borrowing has contributed to Ghana’s current economic challenges.
He noted that Ghana’s fiscal deficit, which stood at 3.2% of GDP in 2023 and is projected to rise to 5.2% in 2024, underscores the urgent need for a more sustainable debt management strategy. He stressed that instead of seeking expensive foreign loans, the government should focus on securing multilateral and domestic financing, which offer lower interest rates and greater economic stability.
“Why the rush to return to the capital market after restructuring? It was our heavy borrowing from the same market that led to this crisis, and yet we are eager to go back. We must be more prudent and cautious when it comes to borrowing, especially Eurobonds,” he cautioned.
Ghana recently undertook a debt restructuring program under the guidance of the International Monetary Fund (IMF) to ease financial pressures and restore macroeconomic stability. However, concerns remain about the long-term sustainability of the country’s debt.
Professor Quartey highlighted that while access to external financing is important, an overdependence on costly commercial loans can trap the country in a cycle of debt distress. He urged policymakers to prioritize fiscal discipline and explore alternative sources of funding that are more sustainable.
His comments come at a time when the government is seeking avenues to stabilize the economy and implement reforms under the IMF-supported program. The call for a shift in borrowing strategy aligns with growing concerns about the need for responsible debt management to ensure economic resilience.
