Professor Peter Quartey, Director of the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana, has called for the imposition of a strict debt ceiling to curb Ghana’s increasing debt levels.

Speaking at a recent forum, Prof. Quartey emphasized the need for fiscal discipline to prevent the country from falling deeper into unsustainable debt. He highlighted that while borrowing is necessary for national development, excessive debt accumulation without proper management can negatively impact the economy.

He noted that Ghana’s capital expenditure, which is crucial for infrastructure and development, has significantly declined despite increasing government borrowing. He stressed that borrowed funds should be used for productive investments that generate revenue rather than recurrent expenditure.

Prof. Quartey also warned that without proper debt control mechanisms, Ghana risks facing further economic difficulties, including higher interest payments, limited fiscal space for essential services, and reduced investor confidence.

As part of the solution, he suggested that the government strengthen financial management systems, ensure transparency in public spending, and diversify revenue sources to reduce dependence on external loans.

His comments come amid ongoing concerns about Ghana’s debt sustainability, especially following the recent debt restructuring efforts under the International Monetary Fund (IMF) program.

Source: MyJoyOnline

The Executive Director Startrite Montessori School, Prof. Peter Quartey, has charged first and second cycle school graduates not to sit idle as they await their results but keep their hands and minds busy.

Professor Peter Quartey, Director of the Institute of Statistical, Social and Economic Research (ISSER), has advised the Ghanaian government to exercise caution before re-entering the international capital markets following the nation's recent debt restructuring. He emphasized that relying heavily on external debt, especially through Eurobonds, is unsustainable for long-term economic growth.

During his inaugural lecture at the Ghana Academy of Arts and Sciences, titled "Debt, Investment, and Growth in Ghana: Did We Borrow to Consume?", Professor Quartey highlighted Ghana's fiscal position. He noted that the country's deficit financing was 3.2% of GDP in 2023, with projections indicating a rise to 5.2% in 2024. He underscored the need for effective debt management and sustainable financing strategies to bolster economic growth while minimizing financial risks.

In line with an International Monetary Fund (IMF)-supported program, Ghana recently undertook a debt restructuring exercise aimed at alleviating its financial burden and restoring macroeconomic stability. Despite these efforts, concerns about the nation's long-term debt sustainability persist. Professor Quartey urged the government to explore domestic financing options to reduce external vulnerabilities.

"I want to sound this caution. Borrow less from the capital market and at reasonable interest rates," he stated. "After the restructuring, you hear we are hoping very soon we will finish the restructuring and be able to go to the capital market. Why the rush to go to the capital market? That is where we went to and we are having these problems, and you still want to quickly finish giving people a haircut and go to the capital market. I think we should tread cautiously when it comes to borrowing, especially Eurobonds and those capital market funds. They are too expensive and unsustainable. We ought to shy away from them. Let us get more multilateral and domestic sources of funding. They are cheaper."

This perspective aligns with previous warnings about Ghana's borrowing practices. In December 2022, reports indicated that Ghana's aggressive approach to tapping Eurobond markets had raised concerns among investors, leading to a reassessment of the country's credit ratings.

Professor Quartey's cautionary advice comes at a critical time as Ghana seeks to balance its development needs with sustainable debt levels. His emphasis on prudent borrowing and exploring more affordable financing options reflects a broader call for fiscal responsibility and strategic financial planning.

Source: Citi Newsroom

Director of the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana, Professor Peter Quartey was on Tuesday, November 23, 2021, inducted as a fellow of the Ghana Academy of Arts and Sciences.