ISSER Calls For Efficient Use of Public Debt, Warns of Weak Capital Spending Despite Fiscal Consolidation Progress
The Institute of Statistical, Social and Economic Research (ISSER) has affirmed that government’s fiscal consolidation drive remains on track but expressed concern over the country’s rising debt levels and limited investment in capital projects that drive long-term growth.
According to the Institute’s State of the Ghanaian Economy Report (SGER) 2024, Ghana’s public debt rose from 43.9 percent of GDP in 2013 to around 72 percent in 2023 before easing to 61.8 percent by end-2024, reflecting partial debt relief under the ongoing restructuring programme.
Despite the reduction in debt, ISSER noted that capital expenditure remains alarmingly low. Capital spending increased marginally by 0.1 percentage points to 2.5 percent of GDP in 2024, compared to 2.4 percent in 2023 — a sharp fall from 6.9 percent of GDP recorded in 2010. The country’s debt-to-GDP ratio stood at 43.8 percent as of June 2025.
Speaking at the launch of the report, ISSER Director Prof. Robert Darko Osei urged government to enhance the efficiency of public investment, ensuring that every borrowed cedi is channelled into productive ventures capable of generating sustainable economic returns.
“For debt to be useful for economic growth, it must be used to undertake capital projects such as expansion in education and health infrastructure,” Prof. Osei stated.
He added that the country’s overreliance on mineral exports, particularly gold, poses risks to export diversification and economic resilience. “We have seen a significant surge in gold exports, with South Africa emerging as Ghana’s major trading partner, over 84 percent of our exports to that country are gold,” he revealed.
Prof. Osei cautioned against an outright ban on small-scale mining, calling instead for a “nuanced approach” to address the environmental and economic dimensions of mining.
“The answer is not to stop all mining activities. If the issue is the process of how we mine, then let’s tackle that,” he remarked, stressing the need for cost-benefit analyses and research-based policymaking.
He urged government to fund further research into the environmental and agricultural impacts of mining, particularly illegal gold mining (galamsey), which continues to degrade water bodies and farmlands.
The SGER 2024 also recommended that government borrow responsibly at near-concessional terms and empower oversight bodies such as the Public Interest and Accountability Committee (PIAC) to enhance transparency in debt management. It further proposed the establishment of a Value for Money Authority to rigorously assess government expenditure and the reduction of recurrent spending.
Meanwhile, immediate past ISSER Director, Prof. Peter Quartey, commended the Bank of Ghana (BoG) for its inflation-targeting performance but cautioned that economic growth must not be compromised in pursuit of lower inflation.
“I was surprised when the Governor said inflation will reduce further by end-year, given that it is already within the target band of 8 plus or minus 2,” Prof. Quartey said, advocating for an optimal balance between price stability and growth.
He stressed that some level of inflation is necessary to stimulate spending and growth. “We need optimal inflation to get growth because we are not spending. I would love to see reasonable deficits, moderate inflation, and exchange rate stability, not at the expense of growth and jobs,” he noted.
Prof. Quartey further suggested that the central bank determine a specific inflation threshold conducive to growth, referencing IMF research indicating that developing economies perform best with inflation rates between 10 and 12 percent.
