Professor Peter Quartey highlights that despite Ghana’s considerable borrowing over the past two decades, the anticipated investment and economic growth have not materialized. He emphasizes the need for a legislative 60 percent debt ceiling and improved project selection frameworks to better align loans with productive investments. Quartey also points to declining capital expenditures and poor project execution as major obstacles to economic growth.
Professor Peter Quartey, an economist and Director at the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana, has pointed out that despite extensive borrowing over the last two decades, Ghana has not experienced the anticipated investment and economic growth. He highlights that the majority of borrowed funds have been allocated towards salaries and interest payments, rather than productive sectors.
During his inaugural lecture as a Fellow of the Ghana Academy of Arts and Sciences, titled “Debt, Investment, and Growth in Ghana: Did We Borrow to Consume?”, Prof. Quartey advocated for a legislative debt ceiling of 60 percent and the establishment of a framework to align loans with investments that generate returns and enhance economic growth.
He presented data indicating that Ghana’s debt has soared from 42.9 percent in 2013 to 82.9 percent in 2023, although it is projected to decline to 61.8 percent by the end of 2024, owing to the current debt restructuring program. He also noted a decline in capital spending as a percentage of the Gross Domestic Product (GDP), falling from 6.9 percent in 2010 to just 2.4 percent in 2023, with only a minor increase to 2.5 percent anticipated in 2024.
Capital spending is vital for the development of public infrastructure such as roads, bridges, and technological advancements, which can stimulate long-term economic growth. Prof. Quartey criticized the inefficient management practices surrounding project selection and execution, asserting that the weak framework has hindered investment returns and growth.
He emphasized the lack of rigor in project approval processes, particularly for large initiatives, which leads to significant delays in execution. For instance, despite a disbursement of US$12 million for the Pwalugu Dam project, construction has yet to commence after six years.
Highlighting the inefficient use of funds due to poor procurement practices and lack of competitive bidding, Prof. Quartey called for a systematic approach to project selection that reflects national development priorities, rather than partisan interests.
In conclusion, Professor Quartey’s analysis underscores the urgent need for Ghana to address the mismatch between its growing debt and low investment returns. A legislative debt ceiling, improved project selection processes, and a robust framework for monitoring investments are essential to ensure that borrowed funds stimulate economic growth rather than consumption. By aligning debt with strategic investments, Ghana can foster sustainable development and enhance the welfare of its citizens.
Original Source: gna.org.gh
