Professor Joshua Yindenaba Abor, Financial Economist, has asked the government to ensure that macroeconomic stabilization leads to less borrowing.
He said this on the back of the country’s high debt burden, a major factor for the country’s ongoing US$3 billion International Monetary Fund (IMF) loan-supported programme.
“The government will need to avoid accruing significant amounts of both domestic and external debt and that will require implementing a more sustainable debt management plan,” he said. In an exclusive interview with the Ghana News Agency, Prof. Abor said although there was nothing wrong with borrowing, the government’s inability to service them when due posed enormous challenges to individuals, households and businesses.
According to the Bank of Ghana’s January 2025 Summary of Economic and Financial Data, the country’s public debt stock was GHS736.0 billion in November 2024, a decline from the GHS761bn in October 2024. The decline was attributed to the country’s external debt restructuring, a situation, Prof Abor said had been a major source of relief in the country’s debt and fiscal management efforts.
“It is understandable that our expenditure will always exceed our revenue as a developing country, but it should be such that the deficit will lead to low or less borrowing,” the Professor of Finance, said.He recommended that government invested borrowed funds into capital expenditure projects that would generate growth and change the agrarian nature of the Ghanaian economy.
“The economy is associated with rigidities, and we should be able to diversify away from the excessive dependence on primary commodities and start investing in areas such as energy, tourism, manufacturing, technology, which can help rake in revenue,” he said. On prudent fiscal management, Prof Abor called for an effective blend of expenditure cutting measures and increased revenue mobilization.
“When it comes to roads for instance, the government must ensure that we don’t have contracts that will make the country pay twice or thrice the cost. There should also be a conscious attempt to expand the tax net by creating an environment to increase compliance,” he said.
Source: GNA
