Economist, Professor Godfred Bokpin, has cautioned government to be measured in its appetite for borrowing as result of a drop in Ghana’s debt in relation to the size of the economy or Gross Domestic Product (GDP).
"Provisional estimates by the Ghana Statistical Service showed that the country recorded a growth rate of 5.4% in 2021, cutting the debt-to-Gross Domestic Product (GDP) ratio to 74.4%, from the earlier 80.1%."
But speaking to Joy Business on concerns that the decline may push government to borrow more, Prof. Bokpin who is with the University of Ghana warned there is no fiscal space to increase the debt stock.
“We have to be very cautious. The fact that debt-to-GDP ratio has dropped on the strength of higher growth doesn’t necessarily mean that we have the fiscal space to go on borrowing,” he stressed, adding that, “debt-to-GDP ratio in itself is not a comprehensive measure of Ghana’s debt sustainability position”.
Prof. Bokpin explained that a mere look at the baseline interpretation of debt-to-GDP ratio simply shows how the country can pay its debt in a year.
“We need to go beyond debt-to-GDP ratio and look at other indicators of debt sustainability, particularly, liquidity measures”.
Giving some recommendations, he advised that it is important for government to improve its liquidity position through revenue collection.
“This current drop in the debt-to GDP ratio as a result of the expansion is a false hope”, he said.
He maintained that it is time to focus on how the expansion in the economy can be converted into improved tax collection through policies that will impact the productive sectors of the economy.
Touching on the size of Ghana’s external debt stock, Prof. Bokpin advocated a move that will enhance export to help cater for debt.
He suggested that government must add value to export commodities to increase the country’s foreign earnings.
Latest Stories
-
Volta Regional ECG Manager assures residents of a bright Christmas
4 minutes -
Taste and see fresh Ghanaian flavors on Delta’s JFK-ACC route
5 minutes -
ECG to pilot new pre-payment system in Volta Region in 2025
10 minutes -
Hammer splits ‘Upper Echelons’ album into two EPs; addresses delay in release
13 minutes -
NDC MPs back Supreme Court’s ruling on anti-LGBTQ bill petition
24 minutes -
Dr. Rejoice Foli receives Visionary Business Leader Award
27 minutes -
Economic missteps, corruption, unemployment and governance failures caused NPP’s crushing defeat – FDAG report reveals
29 minutes -
Supreme Court, EC need complete overhaul to safeguard our democracy – Benjamin Quarshie
32 minutes -
Dr. Elikplim Apetorgbor: Congratulatory message to Mahama
38 minutes -
Gabriel Kumi elected Board of the Chamber of Oil Marketing Companies
46 minutes -
Ga Mantse awards scholarships worth GHȼ100,000 to pupils in Ga communities
51 minutes -
NDC minority did not help the governance of the country – Afenyo-Markin
1 hour -
NDC gov’t will struggle to fund social intervention programmes – Afenyo-Markin
1 hour -
Man arrested for vandalising property at Parliament
1 hour -
NDC’s internal struggle over who succeeds Mahama in 2028 has started – Afenyo-Markin claims
1 hour