Professor Peter Quartey criticized Ghana’s heavy borrowing, stating it has not led to the expected economic growth or investment. He argued funds have been misallocated primarily to salaries and loan interest. Quartey urged the introduction of a debt ceiling and a framework to align borrowing with productive investments. He highlighted inefficiencies in project management and the need for careful project selection to enhance economic outcomes.
Professor Peter Quartey, an economist and Director of the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana, has expressed concern regarding Ghana’s heavy borrowing over the past two decades. He remarked that instead of fostering economic growth and attracting investment, funds have primarily been allocated to salaries and interest payments on loans.
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?”, Professor Quartey advocated for the urgent establishment of a 60 percent debt ceiling. He emphasized the necessity for a cohesive framework that aligns loans with impactful investments to enhance economic performance and improve the living standards of citizens.
The professor underscored that empirical findings indicate limited long-term growth impacts from public investment due to inadequate project appraisal and management practices. He highlighted a significant rise in national debt, which grew from 42.9 percent in 2013 to 82.9 percent in 2023, before a projected decline to 61.8 percent by 2024 due to ongoing debt restructuring measures.
He also noted a substantial drop in capital spending, from 6.9 percent of GDP in 2010 to only 2.4 percent in 2023, with only a marginal recovery to 2.5 percent expected in 2024. Capital spending is critical for development projects such as infrastructure, which are essential for job creation and economic competitiveness.
According to Professor Quartey, the primary reason for the disconnect between Ghana’s substantial borrowing and poor investment and growth outcomes is the absence of effective project selection, monitoring, and evaluation frameworks. He provided examples of projects, such as the Pwalugu multi-purpose Dam, which have received significant funding yet remain unstarted after six years.
He criticized the lack of rigor in project approval processes and the inefficiencies stemming from inadequate competitive bidding and procurement practices in Ghana, leading to delays in project implementation and poor execution.
To address these issues, Professor Quartey recommended that capital projects be selected through a national development planning process rather than partisan interests. He advised that medium-term strategies and desired outcomes need to be thoroughly considered before commencing new projects.
In conclusion, Professor Peter Quartey highlighted a critical misalignment in Ghana’s borrowing strategy and its economic growth outcomes. He called for a reform in project selection and a clear framework to connect debt with productive investments. Addressing these challenges is essential for ensuring that government borrowing results in tangible benefits for the economy and citizens of Ghana.
Original Source: www.myjoyonline.com
