A Senior Lecturer of the University of Ghana, Professor Godfred Bokpin, has warned the government against excessive borrowing, warning it could disrupt growth projections.
Professor Bokpin, who is also an IMANI Fellow, has also doubted Ghana’s resolve not to fall back on the International Monetary Fund (IMF) for assistance after the current deal ends in 2018.
“The rate at which we borrow to finance the infrastructural deficit has implication for boosting productivity growth,” Prof Bokpin added.
According to him, a cursory study of Ghana’s relationship with the IMF reveals that on the average, every three years and nine months Ghana seeks the assistance of the IMF.
The renowned Professor made the comments during his inaugural IMANI Fellowship Lecture on “How the 2019 Budget Addresses Sustainability Concerns Post-IMF Programme.”
Photo: Prof Bokpin Senior Lecturer of the University of Ghana.
The caution by the Prof Bokpin comes at a time when Ghana’s total debt stock has reached GHS170.8 billion as of September 2018, according to central bank figures.
According to the Bank of Ghana, the country added 11.4 billion cedis to its debt stock between July and August 2018, representing 57.2 per cent debt-to-GDP.
The country, within the period, accumulated an external debt component of 86.6 billion cedis while the domestic debt component has reached 84.2 billion cedis.
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Prof Bokpin has meanwhile advised managers of the economy to consider the IMF Policy Support Programme (PSP) because it offers low-income countries that do not need Fund financial assistance a flexible tool that enables them to secure Fund advice and support without a borrowing arrangement.
Prof Bokpin said this non-financial instrument was a valuable complement to the IMF’s lending facilities under the Poverty Reduction and Growth Trust.
He said the PSP helps countries design effective economic programmes that deliver clear signals to donors, multilateral development banks, and markets of the Fund’s endorsement of the strength of a member’s policies.
He noted that the PSP allowed them to continue their periodic review.
Prof Bokpin said growing the economy and exporting would improve our rankings on the DSI.
He said maintaining stable exchange rate was key given the composition of Ghana’s debt stock.
He said the Government needed to devise responsible funding alternatives to bridge the huge infrastructural deficit.