Professor Peter Quartey highlighted that Ghana’s extensive borrowing over two decades has not resulted in the expected investment and economic growth. He proposed a 60 percent debt ceiling and a framework to better align debt with productive investments. Quartey indicated that inefficient project management and monitoring contributed to this disparity and called for strategic selection of capital projects to enhance economic outcomes.
Professor Peter Quartey, an esteemed economist from the University of Ghana, revealed that despite Ghana’s heavy borrowing over the past twenty years, the anticipated growth and investment have not materialized. Instead, financial resources have predominantly been allocated towards public sector salaries and interest payments on loans, rather than being channeled into productive economic sectors.
At his inaugural lecture for the Ghana Academy of Arts and Sciences, Professor Quartey advocated for establishing a 60 percent debt ceiling and a robust framework to align loans with strategic investments. He emphasized that this would enhance economic growth and improve the welfare of citizens. His presentation was titled “Debt, Investment, and Growth in Ghana: Did We Borrow to Consume?”
Professor Quartey’s analysis highlighted that Ghana’s public investment has had a limited effect on long-term growth, mainly due to inadequate project selection and management practices. He noted the country’s debt increased from 42.9 percent in 2013 to 82.9 percent in 2023, with a projected decrease to 61.8 percent by the end of 2024 as a result of the ongoing debt restructuring initiatives.
The economist pointed out a significant decline in capital spending, from 6.9 percent of GDP in 2010 to merely 2.4 percent in 2023, with only a slight increase expected in 2024. Essential infrastructure investments, categorized as capital expenditure, are crucial for fostering economic growth and job creation by enhancing productivity and competitive capacity.
Professor Quartey attributed the discrepancy between Ghana’s high debt levels and low investment returns to weak project selection methods and inefficient monitoring systems. He lamented instances where substantial debts were incurred by successive governments with minimal demonstrable benefits, such as the Pwalugu multi-purpose Dam project, which has not commenced despite the allocation of US$12 million.
In his remarks, he asserted that project approval processes lack rigor, leading to significant delays in execution, which adversely affects project outcomes. Moreover, he criticized the inefficient use of funds due to inadequate competitive bidding practices and poor procurement methods.
To remedy these issues, Professor Quartey called for a framework that aligns debt with investments in productive sectors. He recommended that capital projects be selected based on a comprehensive national development plan rather than political affiliations. He stressed the importance of considering long-term objectives before initiating such projects.
In summary, Professor Peter Quartey emphasizes the urgent need for Ghana to reassess its borrowing strategy, advocating for a debt ceiling and improved alignment of loans with productive investments. Given the historical inefficiencies in project execution and the alarming decline in capital spending, implementing a robust framework for project selection and evaluation is essential for fostering economic growth and improving citizens’ livelihoods.
Original Source: gna.org.gh
