Professor Peter Quartey, Director of the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana, has raised concerns about the Ghanaian government’s plan to return to the capital market for loans. Speaking during his inaugural lecture as a Fellow of the Ghana Academy of Arts and Sciences in Accra, Quartey emphasized the need for caution and advised focusing on multilateral financing and increasing domestic revenue mobilization to support the nation’s development goals.
Capital Market Borrowing: A Risky Path
Professor Quartey’s warning comes as Ghana grapples with rising debt levels, which reached 82.9% of Gross Domestic Product (GDP) in 2023 before slightly decreasing in 2024. Despite this, the country still faces the risk of further increasing its borrowing from the capital market, which, according to Quartey, has proven to be expensive and unsustainable for long-term development.
Quartey’s remarks were made during a lecture titled “Debt, Investment, and Growth in Ghana: Did We Borrow to Consume?” The lecture, attended by economic experts, policymakers, and students, explored key issues surrounding Ghana’s debt and development financing.
A Dangerous Dependence on Capital Market Loans
During his address, Quartey pointed out that borrowing from the capital market without utilizing those funds for productive ventures has contributed to Ghana’s unsustainable debt trajectory. He emphasized the need for the government to be cautious when considering loans from the capital market, particularly as loans from Eurobonds and other market sources tend to come with high interest rates.
“Why the rush to go to the capital market?” Quartey questioned. “Borrowing without investing those funds wisely has led to unsustainable debt. We must borrow less from the capital market and at reasonable interest rates,” he cautioned.
Government’s Plan to Reopen Domestic Bond Market
The cautionary advice comes after Finance Minister Dr. Cassiel Ato Baah Forson announced, during the 2025 budget presentation, that the government intends to cautiously reopen the domestic bond market. This move is part of Ghana’s strategy to manage its national debt while seeking avenues to stabilize the economy.
Despite this step, Quartey expressed skepticism about the government’s approach, noting that past borrowing from the capital market has often been used for public sector salaries and interest payments, rather than long-term investments that could yield significant economic returns.
Multilateral and Domestic Funding
Quartey called for a shift toward multilateral financing and domestic sources of funding, which he described as more affordable and sustainable compared to loans from the capital market. He highlighted the importance of diversifying Ghana’s sources of financing to ensure the country’s economic growth is not hindered by high-interest debt.
“We ought to shy away from Eurobonds and other expensive loans,” Quartey said. “Multilateral and domestic sources are cheaper and can provide long-term stability for the country.”
The Growing Debt Burden
Ghana’s debt situation has worsened since 2013, when the country’s debt stood at 42.9% of GDP, below the International Monetary Fund’s (IMF) sustainability threshold of 50%. However, by 2023, this debt ratio had climbed to an alarming 82.9%, a level that raised concerns about the country’s ability to repay its obligations. While the ratio decreased to approximately 76% in 2024, the government still faces significant challenges in managing its growing debt burden.
Calls for Responsible Borrowing
Emerita Professor Takyiwaa Manuh, Vice President of the Arts Section of the Ghana Academy of Arts and Sciences, also weighed in on the country’s debt situation, expressing concerns about the future. “The debtor must eat, but the debtor must be careful of what they eat,” she said, highlighting the importance of responsible borrowing.
Manuh expressed hope that Quartey’s lecture would spark ongoing discussions to find practical solutions to Ghana’s debt challenges and improve the country’s overall financial stability.
Policy Implementation is Key
Professor Manuh also called on policymakers to implement policy proposals from academia to address the nation’s debt challenges and improve the living conditions of citizens. By taking a more cautious approach to borrowing and seeking alternative financing options, Ghana can safeguard its economic future while continuing to invest in development projects that will benefit the country’s people.
A Balanced Approach to Financing
As Ghana looks to navigate its debt challenges and pursue sustainable development, the cautionary advice from Professor Quartey serves as a timely reminder of the risks associated with excessive borrowing from the capital market. By prioritizing multilateral financing, increasing domestic revenue mobilization, and ensuring that borrowed funds are invested wisely, the government can help stabilize the economy and secure a brighter future for the nation.
