Director of the Institute of Statistical, Social and Economic Research (ISSER), Professor Peter Quartey, has called for the establishment of an independent fiscal responsibility council with real enforcement power and a legislated debt ceiling of 60% of GDP to ensure prudent economic management.
He warns that Ghana’s borrowing patterns in recent years have been unsustainable, with funds largely spent on recurrent expenditure and interest payments rather than productive investments.
Without stricter fiscal discipline, Professor Peter Quartey cautions, the country risks worsening its economic vulnerabilities.
“Ghana spent a greater proportion of borrowed funds on recurrent expenditure and interest payment, especially in the last few years. Therefore a greater part of the debt accumulated was consumed rather than channeled into productive investment.
“Funds investments were not effectively utilized. Due to a lack of competitive bidding and poor procurement practices. What is the way forward? One is to legislate a debt ceiling – a debt to GDP ratio of 60%.
“I think at the National Economic Dialogue that was our proposal that we legislate a debt ceiling of 60%. ECOWAS is proposing 70% but I think that is too high because if you slip from 70, you are likely to get into the 80’s and we will cry for a debt exchange and restructuring.
“We certainly have to practice prudent financial management and establish independent fiscal responsibility council. An independent one that can bite,” he said at his inaugural lecture at the Ghana Academy of Arts and Sciences on the topic “Debt, Investment, and Growth in Ghana: Did We Borrow to Consume?”