Borrowing not the problem, but how it is used matters – NPP's Francis Asare on Ghana's rising domestic debt

The Communications Officer of the New Patriotic Party (NPP) in the Biakoye Constituency, Francis Asare, has urged government to prioritize productive investments and tighten revenue collection as Ghana's domestic borrowing continues to rise.

Speaking on Bubune Morning Show hosted by Nana Yaw Asiamah while discussing reports that Ghana's domestic borrowing had exceeded GH¢46 billion within three months, Mr. Asare argued that borrowing, in itself, is not necessarily harmful, but becomes a challenge when loans are used for projects that do not generate economic returns.

According to him, government revenue has been affected over the years by the removal of several taxes, reducing expected income and making it difficult to finance planned development projects without resorting to borrowing.

He explained that Ghana's current borrowing is largely domestic because the country has limited access to the international capital market following the Domestic Debt Exchange Programme (DDEP).

"Once government revenue falls below expectations, the state is compelled to borrow in order to complete ongoing projects," he said.

Mr. Asare, however, cautioned that the country's debt burden could become more challenging from next year when repayments under the debt restructuring programme intensify.

He warned that Ghana risks falling into a cycle of borrowing simply to repay existing debts if prudent fiscal measures are not implemented.

"We should avoid getting into a situation where we continue borrowing just to service old debts. That only places more pressure on the economy," he stated.

The NPP communicator observed that although government is investing heavily in roads, markets and other infrastructure, many of these projects do not immediately generate revenue for the state.

He therefore called for greater investment in productive sectors, particularly manufacturing and industry.

Mr. Asare urged government to strengthen and operationalise the One District One Factory (1D1F) initiative to increase production, create jobs and generate sustainable revenue.

According to him, expanding Ghana's productive capacity would reduce dependence on borrowing while boosting economic growth.

Beyond production, he stressed the need to improve domestic revenue mobilisation by strengthening tax collection systems, reducing leakages and expanding digital payment platforms to eliminate corruption in public revenue collection.

He noted that revenue agencies had fallen short of several collection targets and called for stricter enforcement to improve government income.

Mr. Asare also appealed to government to exercise greater spending discipline by reviewing project priorities.

He suggested that instead of approving every proposed infrastructure project simultaneously, government should phase implementation based on urgency to reduce borrowing requirements.

"If resources are limited, we should focus on the most critical projects first rather than borrowing excessively to execute everything at once," he said.

Touching on the Bank of Ghana's foreign exchange interventions, Mr. Asare questioned whether continuous injections of dollars into the market to stabilise the cedi represented the best long-term strategy.

He suggested that some of those resources could instead be invested in productive sectors while allowing market forces to play a greater role in determining the exchange rate.

On the broader issue of public borrowing, Mr. Asare maintained that every government borrows to finance development and that borrowing should not be viewed negatively.

"What matters is the size of the borrowing, the purpose for which it is taken, and ensuring the money is used for productive investments that generate returns," he explained.

He recommended that future borrowing should support value addition, local industrialisation and import substitution, citing oil refining, gold processing and poultry production as examples of sectors capable of generating long-term economic benefits.

Reflecting on lessons from Ghana's debt restructuring programme, Mr. Asare called for stricter borrowing limits, prudent debt management and a stronger focus on financing projects that can generate income rather than solely expanding social infrastructure.

He expressed optimism about Ghana's economic future but urged political actors to avoid politicising the country's debt situation, insisting that sustainable fiscal management would require national consensus rather than partisan debate.