Borrowing for Growth or Profligacy? A Critical Look at the Akufo-Addo Administration’s Economic Legacy

Former Finance Minister Dr. Mohammed Amin Adam has staunchly defended the borrowing practices of the Akufo-Addo administration, arguing that the loans were necessary to address economic challenges and support growth and stability. While his defense highlights the global economic pressures faced during the administration, particularly the COVID-19 pandemic, it raises critical questions: Were these loans truly for investment in sustainable growth, or did they fuel profligate spending that left Ghana burdened with debt?

The Context: Borrowing Amid Economic Challenges

The Akufo-Addo administration, which spanned from 2017 to January 6th, 2025, faced significant economic hurdles, including the global COVID-19 pandemic. Dr. Mohammed Amin Adam has argued that borrowing was essential to mitigate the pandemic’s impact, stabilize the economy, and fund critical infrastructure projects. He contends that without these loans, Ghana’s economy would have faced even greater instability. Borrowed funds were reportedly used to address immediate fiscal gaps, support healthcare systems, and invest in infrastructure to stimulate economic recovery.

The Role of International Grants and Support

In addition to borrowing, Ghana received considerable assistance from international donors in the form of grants and financial support. These grants played a crucial role in addressing immediate health and economic challenges. For instance, they contributed to strengthening healthcare systems, enhancing community engagement, and supporting economic recovery efforts. This assistance provided much-needed relief and offered a buffer without increasing the nation’s debt obligations.

The availability of such support underlines the importance of effectively leveraging international partnerships while simultaneously strengthening domestic revenue generation and ensuring prudent fiscal management to minimize reliance on external aid in the future.

However, critics argue that the administration’s borrowing spree lacked fiscal discipline and transparency. Ghana’s public debt ballooned to unprecedented levels, exceeding GH₵721 billion by the end of the administration. This debt burden has had far-reaching consequences, including high inflation, a depreciating cedi, and reduced fiscal space for future governments.

As economist John Kenneth Galbraith once said, “The process by which banks create money is so simple that the mind is repelled.” Similarly, the simplicity of borrowing to address immediate needs often obscures the long-term consequences of debt accumulation.

Investment or Profligate Spending?
Dr. Amin Adam’s defense hinges on the claim that the borrowed funds were used for investment in growth-enhancing projects. While some infrastructure projects, such as roads and schools, were indeed undertaken, a significant portion of the borrowed funds appears to have been channeled into less productive ventures. Examples include:

1. The National Cathedral Project: This controversial project consumed millions of cedis, raising questions about its prioritization over essential services like healthcare and education.

2. Procurement Irregularities: Allegations of inflated costs and sole-sourced contracts have marred the administration’s legacy, suggesting that borrowed funds were not always used efficiently.

3. Recurrent Expenditure: A substantial portion of the loans was used to finance recurrent expenditure, such as salaries and administrative costs, rather than capital investments that generate long-term economic returns.

The lack of transparency and accountability in the utilization of these funds has fueled public skepticism. As the Akan proverb goes, “If the drum beats too loudly, it may burst.” The administration’s borrowing practices may have created a short-term illusion of stability, but the long-term consequences are now evident.

Recommendations for Future Fiscal Policy

To avoid repeating the mistakes of the past, Ghana must adopt a more disciplined and transparent approach to borrowing. Key recommendations include:

1. Strengthening Fiscal Responsibility: Enforce strict adherence to the Fiscal Responsibility Act to ensure that borrowing is limited to sustainable levels.

2. Enhancing Transparency: Publish detailed reports on the utilization of borrowed funds to build public trust and accountability.

3. Prioritizing Productive Investments: Focus on projects that generate economic returns, such as industrialization and renewable energy, rather than symbolic or non-essential ventures.

4. Diversifying Revenue Sources: Reduce reliance on borrowing by expanding the tax base and improving revenue collection mechanisms.

A Message to Dr. Mohammed Amin Adam

Dr. Amin Adam’s defense of the Akufo-Addo administration’s borrowing practices must be approached with caution. While it is important to contextualize the economic challenges faced during the administration, it is equally crucial to acknowledge the shortcomings in fiscal discipline and transparency. By downplaying these issues, Dr. Amin risks undermining the credibility of his arguments and the trust of the Ghanaian people.

As Mahatma Gandhi wisely said, “The best way to find yourself is to lose yourself in the service of others.” In this context, serving the nation requires an honest appraisal of past mistakes and a commitment to advocating for policies that prioritize the welfare of all Ghanaians.

Dr. Amin must be circumspect in his commentaries, recognizing that the legacy of the Akufo-Addo administration is not just a matter of economic theory but a lived reality for millions of Ghanaians. The burden of debt, the erosion of public trust, and the economic hardships faced by ordinary citizens demand a more nuanced and balanced narrative.

Conclusion: A Call for Accountability and Reform

The debate over the Akufo-Addo administration’s borrowing practices is not just about numbers—it is about the future of Ghana. The lessons of the past must inform the policies of the present and the aspirations of the future. Borrowing is not inherently bad, but it must be done responsibly, transparently, and with a clear focus on sustainable development.

As Ghana moves forward, it is imperative to prioritize the needs of the people over the ambitions of the few. The time for profligacy is over; the time for accountability and reform is now. Let this be a turning point in Ghana’s economic journey—a moment when the nation chooses prudence over excess, transparency over opacity, and progress over stagnation.

Retired Senior Citizen
Teshie-Nungua
[email protected]