Economists Appeal For Debt Sustainability

Some economists have called on government to devise coherent and meaningful strategies to ensure sustainability of Ghana's current and future debts.

Addressing a press conference in Accra yesterday, the economists from the Institute of Chartered Economists of Ghana (ICEG), Governance Accountability – Ghana (GAG) and Eben Consultancy, disclosed that that though excessive borrowing poses a risk to the economic security of the country in the long term, one of the canons of good lending should be purpose.

Dr Ebenezer Ashley, Chief Executive Officer (CEO) and Lead Consultant at Eben Consultancy, who addressed the media, explained that as more debts are contracted, the generational debt per head would increase, adding “if due diligence is not carried out, avoidable debts may be contracted for unborn generations.”

“Model advanced economies such as the United States of America, China, Japan, Great Britain and Germany, among others, enjoy high credit rating not as a result of low debt to GDP ratio, but as a result of the judicious and prudent use of debts and other resources at their disposal.

“As a lower middle-income economy, Ghana must not be too concerned about the quantum of debt to the neglect of provision of essential public and institutional infrastructure needed to create economic stimulation, enhance development and growth and assure repayment of contracted debts at due dates.”

Exchange rate challenges
Dr Ashley further indicated that exchange rate volatilities might increase the financial repayment burden of the country.

“More Ghana cedis may be required to settle the same outstanding payments in foreign denominated currencies such as the US dollars or British Pound sterling or Euro.”

Call for more fiscal space
He said government must also strive to create more fiscal space and less financial openings for borrowing.

“To create more fiscal space, government must make conscientious effort to shift from the old paradigm of borrowing short to pay short, to borrowing long to pay short. Negotiations for loan terms must ensure an extension of repayment periods to enable the government heave a sigh of relief in the short and medium terms.”

Incentives for 1D1F
Dr Ashley urged government to intensify the industrialization campaign and announce incentives or packages that would stimulate private sector participation in the 'One District, One Factory,' programme

Appointments
Also, he said appointment of individuals as ministers, metropolitan, municipal and district chief executives and sub-metro heads must be borne out of academic and professional competence and not based on political vigilantism.

Commendation
He said Ghana's credit ratings in recent times by the renowned rating agencies have not been bad- Moody's B3 (stable outlook), Standard and Poor's B- (positive outlook), Fitch's B (stable outlook) and Trading Economics 3i (stable outlook).

“The foregoing is perhaps an affirmation of positives in government's economic management and debt creation strides,” he added.

By Samuel Boadi & Nii Adjei Fio