Ghana’s Heavy Borrowing Fails to Yield Investment and Growth, Says Prof Quartey

Professor Peter Quartey argued that Ghana’s increased borrowing over the past twenty years has not facilitated the expected investment or growth. He advocates for a 60 percent debt ceiling and a framework that aligns loans with productive investments. Poor project management and execution practices hinder capital spending, which has seen a drastic decrease, necessitating reform for economic improvement.

Professor Peter Quartey, an esteemed economist, asserts that Ghana’s substantial borrowing over the last twenty years has not translated into expected investment or economic growth. He notes that a significant portion of these funds has been allocated toward salaries and servicing loan interests rather than being invested in productive sectors. During his inaugural lecture as a Fellow of the Ghana Academy of Arts and Sciences, Professor Quartey emphasized the urgency of legislating a 60 percent debt ceiling and developing a framework to align loans with investments that yield returns, thereby promoting economic growth and enhancing citizens’ welfare.

Referencing empirical data, Professor Quartey expressed concerns that public investment’s impact on long-term growth has been limited due to insufficient project appraisal and management practices. He reported a considerable increase in the nation’s debt from 42.9 percent in 2013 to 82.9 percent in 2023, though it is projected to decrease to 61.8 percent by the end of 2024 as part of the debt restructuring program. He also highlighted a troubling decline in capital spending as it decreased from 6.9 percent of gross domestic product (GDP) in 2010 to only 2.4 percent by 2023, with a marginal rise anticipated to 2.5 percent in 2024.

Capital expenditure, essential for public infrastructure projects designed to stimulate economic growth, has suffered from inefficient utilization and poor procurement practices, according to Professor Quartey. He recounted specific instances of government debt incurment that yielded negligible returns on investments, illustrating the lack of effective frameworks for project selection and execution. Furthermore, he pointed out that certain projects, like the Pwalugu multi-purpose dam, have remained stagnant despite the allocation of funds, indicating a broader issue of poor execution and project approval processes in Ghana.

Professor Quartey concluded by calling for a structured approach to project selection to ensure alignment with national development strategies, advocating for careful planning that transcends partisan interests. He stressed the importance of considering long-term objectives in the selection process of capital projects to ultimately foster economic stability and growth.

In summary, Professor Peter Quartey highlights the disillusionment with Ghana’s borrowing and its failure to foster investment and economic growth. While debt levels have surged significantly, capital investment has notably declined, attributed to poor project selection, management, and execution practices. Professor Quartey emphasizes the necessity for substantial reforms to establish an effective framework for monitoring and appraising projects, linking debt to strategic investments, and ensuring economic development.

Original Source: www.myjoyonline.com