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A Deputy Minister of Finance, Abena Osei Asare, has said there is nothing wrong if a nation borrows for projects that can pay for themselves in the future.
“If you are borrowing for things that can pay for itself in the end, there is nothing wrong with that; there is nothing wrong”, she told Class91.3FM’s Executive Breakfast Show host, Benjamin Akakpo.
The issue about borrowing for consumption has become a major concern to many economists, market watchers and the Bretton Wood institutions (International Monetary Fund and the World Bank).
The World Bank recently cautioned Ghana against excessive borrowing amidst concerns that the country risks being classified as a high debt-distressed country if the situation persists.
The IMF had earlier warned the nation that it was at a high risk of becoming a debt-distressed country. According to the Fund, the Debt Sustainability Analysis is mainly driven by debt service to revenue, exceeding the threshold throughout the forecast horizon, though all other indicators also exceed their threshold at some point over the horizon.
But Mrs Asare said the government is prudently managing the economy and, therefore, monies borrowed are being channeled into viable projects that would generate returns in the future.
For instance, she noted that the funds being channeled into the Free Senior High School project is a human capital development that will enhance development in the future.
“What we are also doing to bring about efficiency in the compensation area is one that is what the Auditor-General is doing, that is what we are also doing. Deleting ghost names from the payroll, going out to validate people so that if you are not supped to be on the payroll, you don’t end up being on the payroll.”
On achieving the fiscal deficit target (4.7% of GDP), she said the nation will work within the target in order not to throw the economic gains out of gear.
“We have come out with the Fiscal Responsibility Act where your deficit is not supposed to go above 5% of GDP and that would help us; previously there was no law. And the PFM will guide us strongly; we believe we will leave within our means”, she noted.
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