Director of Research at the Institute of Economic Affairs (IEA) Dr John Kwakye has said that the IEA is spearheading the passage of legislation to cap borrowing by government.
In his view, this is the surest way to control reckless borrowing by governments and uncontrollable indebtedness.
In a tweet, Dr Kwakye said ” The Institute calls on key stakeholders, including Parliament, Bank of Ghana, TUC and CSOs to support the process.”
The IEA is spearheading the passage of legislation to cap Gov’t borrowing. That’s the only way to avoid reckless borrowing and uncontrollable indebtedness. The Institute calls on key stakeholders, including Parliament, Bank of Ghana, TUC and CSOs to support the process.
— J. K. Kwakye (@JohnKwabenaKwa1) October 11, 2022
He added “IEA welcomes BoG’s endorsement of its call for capping Gov’t borrowing. That’s the only way to stop reckless borrowing and plunging the country into uncontrolled indebtedness.”
The World Bank recently classified Ghana as a high debt distressed country.
The Bank projected that public debt is projected to nudge up in non-resource-rich countries, up to 65.6 percent of Gross Domestic Product (GDP) in 2022 from 65.1 per cent in the previous year.
Debt is expected to jump in Ghana to 104.6 percent of GDP, from 76.6 a year earlier amid a widened government deficit, massive weakening of the cedi, and rising debt service costs, the World Bank said.
“The country’s debt is expected to remain elevated at 99.7 and 101.8 percent of GDP in 2023 and 2024, respectively. Tightening of financial conditions globally along with the fall of the domestic currency widened the sovereign spread by 233 basis points since December 2021.
“As a result, the country lost access to international markets. It needs $1.5 billion in assistance from the IMF, which could help to shore up public finances and regain access to credit markets,” it said in its its October 2022 Africa Pulse Report,
It added that “Nevertheless, despite the negotiation with the IMF, investors remain nervous about the country’s debt sustainability.
“These concerns were expressed by the country’s local and foreign currency ratings downgrade from B-/B to CCC+/C. As a result, despite the news, the cedi fell further with ripple effects on inflation.”
By Laud Nartey|3news.com|Ghana