Prof. Quartey Urges Debt Ceiling and Financial Discipline
Professor Peter Quartey of the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana has called on policymakers to enforce a debt ceiling, improve financial management, and enhance institutional oversight. He stressed the need for greater transparency in public procurement and better planning for capital projects to prevent the misuse of resources. Speaking at the 2025 Ghana Academy of Arts and Sciences Inaugural Lecture, Prof. Quartey analyzed the impact of borrowing on investment and economic growth under the theme "Debt, Investment, and Growth in Ghana: Did We Borrow to Consume?" He argued that Ghana's rising debt levels have not yielded sufficient productive investments. Despite borrowing as a means to finance development, the effectiveness of these funds in fostering economic progress has been questionable. Excessive debt, he warned, could stifle investment and slow down economic expansion if not managed properly.
Over the past decade, Ghana’s debt-to-GDP ratio has risen to alarming levels, yet capital expenditure has declined significantly. In 2010, it accounted for 6.9% of GDP, but by 2023, it had dropped to 2.4%, raising concerns about whether borrowed funds are being used for long-term development. Comparing economic discipline to personal financial responsibility, Prof. Quartey used the example of an entrepreneur who wasted his fortune versus a janitor who amassed wealth through strategic investments, highlighting that discipline, not intelligence, determines financial success. He also criticized the inefficiency of some government-funded projects, such as the Pwalugu Multi-Purpose Dam, which remains incomplete six years after approval. He pointed out that Ghana has shifted from concessional loans to expensive international borrowing, questioning whether these funds are being allocated to high-return projects or merely covering recurrent expenses and existing debt.
Prof. Quartey advised against Ghana’s return to international capital markets without addressing issues in financial management. He emphasized that the key challenge is not borrowing itself but how resources are utilized. To ensure fiscal sustainability, he proposed the establishment of a strict debt ceiling, stronger financial controls, and a more diversified economy to reduce reliance on external borrowing. By improving financial discipline, Ghana can ensure that loans contribute to productive investments rather than becoming a burden on future generations.
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