Ghana´s debt stock: 'Freeze some dev´t projects' – Economist

The government must prioritise and put a freeze on some of the development projects which are currently sprouting across the country, a senior economist and research fellow at the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana, Legon, Dr Robert Darko has suggested.

According to him, the current debt stock of the country makes it imprudent for the government to be foraying, simultaneously, into so many development projects.

“I think that we need to relook at our development strategy and our current approach at policy generally. The idea that we can consistently and persistently run huge deficits by borrowing and, therefore, we have to be borrowing to actually pay these shortfalls, is certainly not the most suitable.

“I think we need to rethink development, we need to put on hold some of the development projects that we are embarking on, we need to improve the general efficiency of: (a) the prioritisation of some of these development projects, and (b) the actual implementation, spending efficiency of some of these projects.

“If we don’t do that, remember that governments do not operate in a vacuum, whatever government does affects critical players in the economy that should be creating jobs and that is the private sector. And, so, if we do not plan properly, so that we align our development priorities in a way that will also bring along the private sector, then we are actually heading for trouble,” Dr Darko warned when he spoke to Ekow Mensah-Shalders on Class91.3fm’s Executive Breakfast Show on Wednesday March 16.

Speaking about the current debate about Ghana’s debt stock – whether it is $24 billion (as claimed by President John Mahama), or $37 billion (as claimed by former deputy governor of the Bank of Ghana, Dr Mahamudu Bawumai) – Dr Osei said: “I don’t think it is something that we should be haggling over. I think there is a broader issue, though. The broader issue being that the debt stock, as it is, is too high. I mean, we cannot dispute that fact. If you don’t believe what we Ghanaian economists say, at least, the IMF and others, who we deal with and who support our development programmes, have also made the same point, so, the debt stock is too high.

“We cannot run away from the fact that the debt stock, currently as it is, is too high. You cannot run deficits at the levels that we’ve run consistently and persistently over the years …I don’t think we should run away from the problem…Our debt position is not good…no doubt, the numbers are not good…” Dr Darko added.

He said the government must not think borrowing was the only avenue it could use to create fiscal respite. “This idea that we can borrow our way out of our current debt situation and indeed borrow our way into development, I think, is a bit misguided. No country has been able to do that and we are not going to be the first country to do that.”

Some of the development projects being undertaken by the government currently include the Kwame Nkrumah Circle interchange; the Saglemi housing project, which will provide 5,000 units; an ultra-modern Terminal 3 at the Kotoka International Airport, which will have a capacity to process 1,250 passengers an hour and up to 5 million passengers a year; the construction of 200 Community Senior High Schools nationwide, the face-lifting of the Kotoka International Airport, a 130-bed Maritime Hospital at Community 3 Tema, a 120-bed District Hospital at Dodowa, the National Data Centre, which was completed recently, a 617-bed University of Ghana Teaching Hospital, 620-bed Greater Accra Regional Hospital at Ridge, the Kotokuraba Market, among a raft of others.