Prof. Peter Quartey, FGA
The Ghana Academy of Arts and Sciences (GAAS), in its commitment to fostering intellectual discourse and evidence-based policymaking, hosted Prof. Peter Quartey, FGA’s inaugural lecture on March 13, 2025, at the GAAS auditorium in Accra. As part of GAAS’s efforts to shape national economic discussions, the lecture explored the theme “Debt, Investment, and Growth in Ghana: Did We Borrow to Consume?”, providing critical insights into the country’s fiscal challenges and policy direction.
Ghana’s Debt and Investment Challenges
Prof. Quartey pointed out that Ghana’s public debt has remained consistently above the Sub-Saharan African (SSA) average, a trend that has worsened over the past decade. He highlighted that while debt can be a tool for economic growth, Ghana has not effectively channeled borrowed funds into capital formation. Instead, a significant portion of public borrowing has been used to cover recurrent expenditures and interest payments, limiting its impact on infrastructure and other growth-enhancing investments.
He further stressed that inefficiencies in the procurement process and investment mismanagement have contributed to the ineffective use of borrowed funds. Without stronger oversight and adherence to competitive bidding processes, Ghana risks accumulating debt without achieving tangible development outcomes.
Strategic Policy Recommendations
To address these challenges, Prof. Quartey proposed several key policy measures:
- Implement a debt ceiling of 60% of GDP to prevent excessive borrowing. He noted that while ECOWAS suggests a 70% threshold, this is too high for Ghana’s economic conditions.
- Enhance public financial management by establishing an independent Fiscal Responsibility Council and ensuring full implementation of the Ghana Integrated Financial Management Information System (GIFMIS).
- Reduce reliance on external borrowing by improving domestic resource mobilization, minimizing deficit financing, and promoting revenue generation strategies.
- Exercise caution with capital market borrowing, as Eurobond interest rates ranging between 8-10% are unsustainable and could exacerbate the country’s debt burden.
- Strengthen export diversification efforts to reduce Ghana’s vulnerability to external economic shocks that negatively impact public finances.
- Improve public expenditure efficiency by amending the Public Procurement Law to establish a Value for Money Office that scrutinizes all government procurements.
- Bolster institutional oversight by empowering Parliament, PIAC, the Auditor General, and the Judiciary to enforce greater accountability in public spending.
- Adopt a long-term national development planning approach to ensure that capital projects are selected based on economic priorities rather than political considerations.
- Enhance data collection and investment tracking by adequately resourcing the Public Investment Unit at the Ministry of Finance to monitor and assess the impact of government investments.
Caution on Returning to Capital Markets
Prof. Quartey also cautioned the government against rushing back to international capital markets following Ghana’s recent debt restructuring under the IMF-supported program. While the restructuring aims to stabilize the economy, he warned that prematurely returning to external borrowing could repeat past financial missteps.
“Why the urgency to return to the capital market? That is where we encountered our current financial challenges. After the restructuring, we hear discussions about quickly going back to borrow. We must tread carefully, particularly with Eurobonds and other high-interest capital market funds. They are expensive and unsustainable. Instead, we should explore more affordable multilateral and domestic financing options,” he advised.
GAAS’s Role in Shaping Economic Policy
GAAS, through its distinguished lecture series, continues to play an instrumental role in ensuring that academic research informs national decision-making. Prof. Quartey’s recommendations will be documented and disseminated by GAAS to policymakers, researchers, and the general public to promote fiscally responsible governance.
As Ghana navigates its economic future, GAAS remains committed to hosting leading experts and thought leaders to drive national discourse on sustainable development. By fostering interdisciplinary discussions, GAAS aims to bridge the gap between academic research and policymaking, ensuring that scholarly insights translate into tangible economic reforms.
Prof. Quartey’s lecture reinforced the need for Ghana to shift from a consumption-driven borrowing model to an investment-led approach. By implementing stronger financial controls, prioritizing value-for-money expenditures, and enhancing institutional oversight, Ghana can ensure that its debt fuels sustainable development rather than economic vulnerabilities. GAAS remains at the forefront of these critical discussions, committed to advancing policy debates that shape the nation’s economic future.
The well-attended lecture attracted notable figures from both academia and industry. Emerita Prof. Takyiwaa Manuh (FGA), Vice President in charge of the Arts Section at GAAS, served as the Chairperson for the event. Other distinguished attendees included Emeritus Prof. Ernest Aryeetey(FGA), former Vice-Chancellor of the University of Ghana, and Kwamina Asomaning, Chief Executive Officer (CEO) of Stanbic Bank Ghana. Also in attendance were students from Accra Academy Senior High School, Presbyterian Boys’ Senior High School, Wesley Grammar, Labone, and Achimota Senior High Schools, as well as Startrite Montessori School and faculty members of the University of Ghana.
