Renowned Economist and Businessman Dr Kofi Amoah a.k.a Citizen Kofi, has argued that Ghana’s economy is weakened due to the constant borrowing by successive governments.
“It is obvious that in the hands of the private individuals, they use their funds more efficiently than when it is in the public sector,” Citizen Kofi told Paul Adom-Otchere on the Good Evening Ghana show on Thursday, April 8.
“The most important aspect of a loan is what the money will do within the society, even so much as the project that the loan is going to do.”
“My main beef here is that we shouldn’t borrow money and give the contract to outsiders…what you do with the money that you borrow strengthens you and doesn’t weaken you, but in the case of Ghana, [borrowed money] weakens us and I think we should all be circumspect and not blame party politics on the borrowing.
He stressed, “As a nation, we are going to borrow, but how we use the borrowed funds is very, very critical for creating strength in the economy.”
Ghana as a country is borrowing too much, with the debt-to-GDP ratio described by some economists as being, “north of 70 per cent, at HIPC levels”.
The last time Ghana was here was in the period 1998-2000 when Ghana underwent an IMF “conditionality” from 2001 to 2005 and reduced its debt to about four billion US dollars by 2008.
Today, Ghana has a net borrowing of about four billion US dollars a year, equivalent to its entire HIPC Completion Point debt.
Due to the large youth unemployment, with little domestic production, the country is import-dependent.
With high unemployment, the tax base has shrunk, rendering the government incapable of generating enough revenue to service its domestic civil service salaries and loan and interest payments to local and foreign lenders.