A Deputy Finance Minister-designate, Abena Osei Asare, has defended the rate of borrowing by the Akufo-Addo administration since it assumed office in 2017.
Ghana’s debt stock currently stands at GHS 300 billion at 70 percent of the country’s GDP.
However, answering questions at her vetting on Thursday, Abena Osei Asare, who has been re-nominated by President Akufo-Addo for the same position, said the government needs to sustain some of its social intervention programmes and infrastructure expansion for the good of the populace, hence the need to borrow more.
“We need to continue with the Free SHS, we need to continue the road construction. We need to continue with the Ghana CARES, we need to continue with the infrastructure the people want to have. So in this situation, what do you do? We try as much as possible to borrow amounts of money that will serve our interest”, she said.
President Nana Addo Dankwa Akufo-Addo has said his government will keep borrowing money to put up projects he described as “assets” to pay back those loans.
He said every country borrows money for projects and Ghana is not an exception.
“We will borrow money; everybody borrows money. The United States of America is one of the biggest debtors in the world. So borrowing money is not necessarily a betrayal of the concept of independence. The key for us in borrowing money is that we borrow money to create assets that will allow us to pay the money back. That is the key…If we borrow the money and use it properly it is an asset for us in expanding our economy and infrastructure,” he added.
President Nana Akufo-Addo and his Vice President, Dr. Mahamudu Bawumia while in opposition criticized the Mahama government over what they called excessive borrowing.
Mahama according to Bawumia had a voracious appetite for foreign loans, an action he described as “reckless” and “worrying.”
Meanwhile, this administration has borrowed more than the Mahama administration.
Excessive borrowing: Ghana’s economy operating like a Ponzi scheme – Dr. Kofi Amoah
Ghanaian businessman, Dr. Kofi Amoah, has expressed doubt that Ghana’s economy will be able to grow exponentially, owing to the country’s excessive borrowing and the poor management of borrowed funds.
According to him, the nature of successive governments’ handling of borrowed funds leaves the country in a more distressing situation when it could have found a way to maximize the use of monies it borrows.
Dr. Amoah said Ghana’s continuous borrowing to service old debts makes the economy operate like a Ponzi scheme, a situation he believes is unsustainable.
He suggested that governments adopt what he calls the “multiplier effect” for borrowed monies.
In explaining the concept, he said rather than investing borrowed funds in foreign contractors, consultants and prefabricated materials from outside, funds borrowed for projects must be used to hire local contractors and source for local materials in order to grow the local economy while at the same time fulfilling the purpose for which the loans are contracted.