Professor Peter Quartey asserts that despite Ghana’s significant borrowing, expected investments and growth have not materialized. He calls for a 60% debt ceiling and improved project appraisal frameworks to ensure better alignment of loans with productive investments essential for economic advancement.
Economist Professor Peter Quartey highlights that Ghana’s extensive borrowing over the years has not translated into the anticipated investment and economic growth. He notes that the borrowed funds have primarily been spent on salaries and debt interest payments instead of beneficial economic sectors. As the Director of the Institute of Statistical, Social and Economic Research at the University of Ghana, Quartey emphasizes the need for a 60 percent debt ceiling and a stronger framework that aligns loans with investments to achieve better economic outcomes.
During his inaugural lecture for the Ghana Academy of Arts and Sciences, titled “Debt, Investment, and Growth in Ghana: Did We Borrow to Consume?”, Quartey presented findings indicating that public investment largely lacks a long-term positive effect on growth due to inadequate project management and selection processes. He pointed to Ghana’s rising debt, which escalated from 42.9 percent in 2013 to 82.9 percent in 2023, before a projected decline due to a current debt restructuring programme.
Quartey further explained that capital spending, or capital expenditure (CapEx), intended for vital public infrastructure, dropped significantly from 6.9 percent of GDP in 2010 to 2.4 percent in 2023, with only a minor recovery anticipated in 2024. Such investments are crucial for job creation, productivity improvement, and enhanced competitiveness, yet their reduction highlights a troubling trend.
He attributed the discrepancy between high debt and low growth to ineffective project selection and evaluation frameworks. Quartey cited examples of government borrowing with little return, such as the Pwalugu multipurpose Dam project, where $12 million has been allocated but no progress has been made over six years. The professor stressed the need for stringent project approval processes to avoid delays and ineffective spending.
Quartey noted that the lack of competitive bidding and poor procurement practices have hindered efficient use of funds. He urged the development of a framework to ensure strategic investments that align with Ghana’s debt levels, recommending that capital projects should undergo thorough national development planning devoid of partisan influences for better alignment with future objectives.
Professor Quartey’s analysis indicates that Ghana’s heavy borrowing has not yielded the expected economic growth due to misallocation of funds towards non-productive areas. He advocates for legislative measures, improved project selection and monitoring frameworks, and careful planning to ensure that investments effectively contribute to sustainable economic growth and development.
Original Source: www.myjoyonline.com
