Ken Ofori-Atta explains how borrowing can transform Ghana’s economy

Finance Minister Ken Ofori-Atta has reiterated the need for Ghana to make room for smart borrowings as the country bids to become an export driven economy.

He explained that the country does not have an over-flowing revenue reserves to push its ambitious economic transformation agenda, hence the need to borrow.

Speaking on Joynews’ Newfile, the Finance Minister said “I think we’re at 60 percent if you include our energy and financial services intervention you axe that and you’re around 58, 59%. The challenge really when you look at the Asian countries, etc is not that you shouldn’t borrow.

“How do you then move to an export-driven economy such that our net international reserves coverage is not four months but its two years or it's three years so that the vexing issue of currency depreciation does not occur?” he said.

The International Monetary Fund (IMF) in its latest staff report expressed concern about Ghana’s current status as a country at high risk of debt distress.

The public debt stock as at September 2019 was pegged at GH¢208.6 billion, equivalent to 60.3 per cent of the country’s gross domestic product (GDP), data from the Bank of Ghana revealed.

The 2020 budget sets aside over GH¢19bn to pay interests alone and is one of the biggest items on the government’s expenditure bill.

Despite the country’s high debt rate, Ken Ofori-Atta stated that Ghana should not panic but rather ensure that the country borrows with care.

“I think the issue is not that we should not borrow; we should borrow with care and if you look at our bit surplus, for example, were around 2billion dollars net. So your challenge is to get appropriately priced funds at the right time to be able for you to do your transformation exercise which will then generate your resources,” he explained.

He added that Ghana borrows because it wants to “inject resources into the economy with the expectation that that will enhance productivity. All countries borrow too. Ghana is not the only borrowing country in the world”.

The Finance Minister also touted his achievements at the Eurobond Roadshow where the government embarked on to raise 3 billion dollars.

“This time around it was 3billion dollars and we got a 15billion dollar response from the international capital market which as you rightly said is three times what we wanted and the lowest rates in our history.”