Here's what Ghana's Finance Minister says on the country's excessive borrowing habit despite IMF, World Bank warnings

Ghana’s Finance Minister, Ken Ofori-Atta has said that the country’s borrowing habit is not detrimental to the economy.

Here's what Ghana's Finance Minister says on the country's excessive borrowing habit despite IMF, World Bank warnings

The move, he said, is rather a necessity if the country wants to transition from an import-driven economy to an export-driven economy.

He added that Ghana does not have all the funds to push such an ambitious agenda, hence the need to borrow.

“I think we’re at 60 percent if you include our energy and financial services intervention you axe that and you’re around 58, 59%. The challenge really when you look at the Asian countries, etc is not that you shouldn’t borrow,” he said.

Adding that “How do you then move to an export-driven economy such that our net international reserves coverage is not four months but its two years or it's three years so that the vexing issue of currency depreciation does not occur?” he said.

IMF warns Ghana on excess borrowing

The International Monetary Fund (IMF) report recently said Ghana is closer to being classified as a high debt distressed country which signifies that the IMF is concerned about the country’s ability to honour its international obligations.

The public debt stock as at September 2019 was pegged at GH¢208.6 billion, equivalent to 60.3 percent of the country’s gross domestic product (GDP), data from the Bank of Ghana revealed.

The 2020 budget sets aside over GH¢19bn to pay interests alone and is one of the biggest items on the government’s expenditure bill.

Finance minister's response

Mr Ofori-Atta while speaking in an interview with Accra based JoyNews said the classification should be no cause for alarm.

According to him, the issue the IMF is trying to raise is not to shy Ghana away from borrowing, but rather to ensure that the country borrows with care.

“I think the issue is not that we should not borrow; we should borrow with care and if you look at our bit surplus, for example, were around 2billion dollars net. So, your challenge is to get appropriately priced funds at the right time to be able for you to do your transformation exercise which will then generate your resources,” he explained.

He said, just like any other country, Ghana borrows because it wants to “inject resources into the economy with the expectation that that will enhance productivity.”

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