Implement strong policies that attract investments from Ghanaians – World Bank tells gov’t
World Bank President, David Malpass, has advised the Government of Ghana (GoG) to put in place policies that are strong and attract investments particularly from Ghanaians as well as foreigners.
Speaking at the Spring Meetings Opening Press Conference on Wednesday, April 20, 2022, Mr Malpass noted the policies should be private sector-led rather than government-led.
Adding that policies that promote government-led investments usually do not end up adding to the competitiveness and the productivity of the country.
“Countries should put in place policies that are strong and that attract investment by their own citizens and by foreigners. Some of those can be revenue mobilization policies but, very important, they should be growth policies and they should attract private sector investment.
“There’s been a tendency to have too much emphasis on government-led investment, which doesn’t end up adding to the competitiveness and the productivity as much as it should, if it were less centralized. I think those steps are important,” he noted.
Touching on the subject of proceeds from the issuance of Eurobonds, Mr Malpass averred proceeds from Eurobonds should be effectively used by the government seeing that it is just a one-time supply of money and not allow it contribute to the unsustainable debt burden of the country.
“As far as euro bonds, the challenge is for governments to use the proceeds very effectively now if they borrow. A giant conflict of interest is that sitting governments are able to borrow, and then future governments and the people of their countries have to pay back the borrowing. Remember, when you borrow principle, you only get to do it once, even if you roll over at zero percent interest rates into the future, which isn’t actually available for developing countries–if you roll over at a low interest rate you still are not able to borrow the principle again.
“It’s only a one-time supply of money, and that has to be used very effectively. And my worry is that hasn’t been the case in certain countries, and they’re left with unsustainable debt. As I mentioned in the opening remarks, it’s important that we have prompt, early resolution processes for unsustainable debt. And we’re working on that with the IMF, collaborating and encouraging the G20 to move quickly in that regard,” he added.
The World Bank President made the above assertions answering a question on the country’s decision to either improve revenue mobilisation or rather issue Eurobonds to correct its deficit position.
