Professor Peter Quartey asserts that Ghana’s heavy borrowing over the past two decades has not yielded expected economic growth or investment, as funds are primarily used for salaries and loan servicing. He emphasizes the need for urgent reforms including a debt ceiling and improved project selection processes to ensure funds are directed towards productive investments.
Professor Peter Quartey, a noted economist and Director of the Institute of Statistical, Social and Economic Research at the University of Ghana, has expressed concern that Ghana’s significant borrowing over the past two decades has not led to the anticipated investment and economic growth. He emphasized that the majority of borrowed funds have been allocated primarily to salaries and servicing debt, rather than being directed toward productive sectors.
During an inaugural lecture for the Ghana Academy of Arts and Sciences, Professor Quartey advocated for the urgent establishment of a 60 percent debt ceiling and a systematic approach to align loans with investments to yield economic returns. He highlighted the importance of ensuring that public investments genuinely contribute to long-term growth, asserting that current project appraisal and selection processes are ineffective.
Quartey pointed out a troubling trend in Ghana’s debt levels, noting that public debt escalated from 42.9 percent in 2013 to 82.9 percent in 2023, before projected reductions due to restructuring efforts. While capital spending was at 6.9 percent of GDP in 2010, it plummeted to 2.4 percent of GDP in 2023, with only a slight improvement anticipated in the coming year.
Capital spending, which is crucial for developing infrastructure and fostering economic productivity, has not been utilized effectively. Quartey observed that inadequate project management and selection processes hindered the efficient execution of investment projects, thereby limiting their potential impact.
He cited specific examples, including the Pwalugu multipurpose Dam project, which has seen considerable financial input without any commencement in construction, reflecting inefficiencies in project handling. He called for rigorous project approval processes, emphasizing the necessity for careful selection of capital projects aligned with national development strategies rather than partisan interests.
Overall, Professor Quartey urged for a comprehensive framework to ensure that debt is matched with strategic investments in key sectors, thereby promoting economic growth and enhancing the welfare of the populace.
In summary, Professor Peter Quartey’s analysis highlights the paradox of Ghana’s increasing debt and stagnant economic growth. He calls for urgent legislative and procedural reforms to ensure that funds are utilized effectively in productive sectors. By establishing a clearer framework for project selection and monitoring, Ghana has the potential to transform its financial strategies into tangible benefits for its citizens.
Original Source: www.myjoyonline.com
