World Bank Warns Ghana Gov’t About Excessive Borrowing
Who said what?
Speaking to the media after paying a courtesy call on the Speaker of Parliament, the Country Director of the World Bank, Pierre Frank Laporte has cautioned Ghana against excessive borrowing amidst concerns that the country risks being classified as high debt distress country if the situation persists. “Countries, especially developing countries have to borrow because most of us do not have adequate resources, we have to borrow to develop but we have to borrow responsibly. At the moment, Ghana’s debt situation according to World Bank description is a country at moderate rate to high risk of debt distress; of course, yes, the country has to be careful,” Mr. Laporte held.
What are the implications of this concern and has the President failed to live up to expectation with regards to the Ghana Beyond Aid Agenda?
He however applauded the country for the economic progress made over the last couple of years, but added there are important challenges that the nation needs to address. Ghana’s total public debt stock increased by GHS6.3 billion between September and November 2019 to reach GHS214.9 billion in November 2019. Of the total debt stock, domestic debt was GHS101.4 billion, of which GHS11.2 billion (3.8 per cent of GDP) represented bonds issued to support the financial sector clean-up. In 2019, interest payments on loans were expected to be GHS19.756 billion. Out of this, GHS4.60 billion was spent on the external debt while GHS15.156 billion was used to service loans contracted from the domestic market.
Mr. Laporte further added “I’m confident the Finance Minister and his team are fully aware of that, we discussed all the time and borrowing as I said is not always a bad thing but you must borrow at the right terms, as best as most favorable as possible and the right amount and the right way.”