Proper mechanism must be adopted to deal with Ghana’s borrowing menace - Seth Terkper

• Mr Terkper said the money is needed to save the country’s economy during a crisis

•He noted that preparations must be made before a crisis so they can be utilised during the period.

• He said natural disasters and other external factors trigger a country to borrow.

Seth Terkper, former Minister of Finance, has said the stakeholders of the country’s economy needs to set up mechanisms to save the country from the numerous borrowings.

According to him, natural disasters and other external factors trigger a country to borrow but stabilization of the economy is key this could be done through saving out of the better days of the economy to over any future crisis.

“We got advice from countries who have been through crisis on what to do to save the country from any future crisis, so we formulated petroleum revenue act and all indications are that, the outcome showed that we were making good progress with one oil field, so we put some money aside for future generations from oil. As a nation, you should save for future purpose so we put some money aside for the budget and we said given the fact that, we were spending too much on consumption and not much investment, we said the money going into the budget should be such that, 30% will go for current expenditure and then 70% for capital investment or development,” he said in an interview with GhanaWeb’s Amos Ekow Coffie in Accra.

“We had a problem where we were not investing much so we put money aside and we had a problem where we were not saving much and we also put some money aside for that, then we said another part of the problem of the economy is that it goes up and down, and sometimes no fault of ours, so there should be a structure that can change this narrative,” he added.

Mr Terkper said the country’s economy cannot be stabilized during crisis because much money is needed to save the situation.

“We had devastating situation like that in previous regimes and we decide to put some money aside to save the situation, so we set up the stabilization fund to stabilize the economy and you don’t stabilize the economy during crisis or you don’t bring it back during the period of crisis. You prepare before the crisis and during the crisis you utilize the resources, so we built the stabilization fund. First, we took 250 Ghana cedis when we had crude oil price falling and this time round under COVID-19 we took $250 million to support COVID-19 so that should tell you that the objectives were achieved,” he noted.

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