Professor Quartey advises caution on Ghana’s return to International Capital Market for borrowing
The Director of the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana, Professor Peter Quartey, has advised the Government to proceed cautiously before returning to the international capital market to borrow money.
He believes that borrowing at commercial rates at this time would not be beneficial for the country due to the significant interest payments involved. Instead, he suggests that the government should focus on increasing domestic revenue by expanding the tax base and improving tax collection methods.
Professor Quartey emphasizes the importance of working towards becoming creditworthy as a nation, as it attracts investments. However, he cautions against rushing back to the capital market because borrowing at commercial rates can have adverse effects on debt sustainability.
He encourages the government to prioritize raising revenue domestically by implementing measures to enhance tax collection efficiency without overburdening the citizens.
President Nana Addo Dankwa Akufo-Addo recently mentioned the possibility of Ghana returning to the capital market, citing the need to take advantage of global savings. However, Finance Minister Ken Ofori-Atta and Professor Quartey both express that there is no rush to borrow from the international capital market.
They believe that by effectively managing expenditures and increasing domestic revenue, Ghana can avoid immediate reliance on external borrowing. The government aims to maintain fiscal discipline, improve the country’s credit ratings, and attract foreign direct investment.
The International Monetary Fund (IMF) recently approved a $3 billion bailout program for Ghana after negotiations that lasted from July to May.
The program is expected to provide a foundation for stabilizing the economy, controlling interest rates and inflation, and eventually enabling Ghana to return to the international capital market.
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