General News of Monday, 16 February 2015
Ghana risks becoming, once again, a highly indebted poor country (HIPC) if frantic and immediate measures are not put in place to end the trend of high borrowing by government, an Economist with the Institute of Economic Affairs (IEA), Dr J.K Kwakye has warned.
The Institute has cautioned the Government to work towards sealing the leakages that have given way to high borrowing in the public sector.
“We cannot go on the same trajectory: we need to take serious measures to rein in…the borrowing. HIPC means you are in [a] hopeless situation already, we don’t have to get there”, Dr. Kwakye warned.
The IEA fears Ghana could return to the economic doldrums of the early 1980s, if the situation is not handled properly. According to the IEA, by 1983, Ghana’s economy was on the brink of collapse due to its huge national debt and high fiscal deficits.
The national debt had reached a catastrophic level of 107.5% of GDP; inflation was at 142%, and commercial banks had stopped lending to commercial enterprises.
Dr. Kwakye told Ultimate Breakfast Show host Prince Minkah Monday that Government, civil society organisations and individuals need to ensure the trend is reversed as soon as possible.
The IEA Economist has suggested that there should be a legislation on “to govern the entire public sector financial management system with well-defined sanctions for violating the law.”