Government loans must be used for intended purposes

By Kodjo
Adams, GNA

Accra, June 18, GNA – Dr Ebenezer M. Ashley, a
Financial Consultant, has called on government to ensure that loans collected
were used productively, saying ‘loans must be used for its intended purposes’.

According to him, there should be proper
accountability for loans contracted, judicious and diligent disbursement of
contracted funds to ensure equitable socio-institutional developments.

Dr Ashley made the call on Monday, in Accra,
at a press briefing on the country’s growing debts and its implication on the
economy.

He said debt sustainability must be defined to
include government’s ability to use contracted loans for the purposes it was
intended for, to accelerate economic development and growth to ease repayment
at the due dates.

He said the country’s total debt for 2017 was
GHc 142.5 billion (US$ 32.5 billion) while the Gross Domestic Product (GDP) was
GH¢204.16 billion (US$46.56 billion) representing 69.8 per cent.

Dr Ashley said between 2016 and 2017, the
country’s domestic debt increased by GH¢13.3 billion, representing about 24.91
per cent increase while the external debt increased by GH¢6.6 billion,
representing about 9.54 per cent increase during the same period.

Comparing the debts to some African countries,
Dr Ashley said Zimbabwe and Mauritania recorded respective GDP of US$17.5
billion and US$5.1 billion during the same period.

He urged government to create more fiscal
space and less ‘financial openings’ for borrowing, and that, creating more
fiscal space should not necessarily whet the nation’s financial appetite for
borrowing.

Dr Ashley stressed that government must make
conscientious efforts to shift from the old paradigm of borrowing short to pay
short, to borrowing long to pay short.

“Diligent and economic borrowing means
carefully considering pool of financial alternatives and settling for one that
offered the best coupon rate and payment terms for the economy,” he added.

He asked government to fully implement the
principle of a succession plan that would enable current and successive
governments to diligently review projects started under previous
administrations and carry them through to a logical conclusion to avoid
needless additions to the national debt.

He said governments must ensure relative
stability of the Cedi against major currencies such as the British Pound
Sterling, Euro and the American Dollar to avert the possibility of issuing more
Cedi to settle the same outstanding debts at maturity dates.

Dr Ashley urged government to put measures in
place to make the country more attractive to foreign investors and
international financial institutions.

GNA

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