Associate Professor and Dean of International Programmes Office at the University of Ghana has said that Ghana’s current debt stock is likely to have an adverse effect on the economy if proper measures are not instituted to manage the situation.

Prof. Eric Osei-Assibey said Ghana is likely to be faced with a myriad of economic challenges including high inflation rates, increased fiscal deficits among others, if monies borrowed are not properly utilised.

“What is going to happen is that the country’s interest payments will go up and this in turn will lead to limited fiscal space to spend on areas that will directly benefit the people,” he said.

His comment comes as part of discussions on the impact of Ghana’s debt stock on the economy.

Ghana’s debt stock

Ghana’s public debt stock hit ¢273.8 billion, about 71% of Gross Domestic Product in September 2020, according to the November 2020 Summary of Financial and Economic Data by the Bank of Ghana.

This is equivalent to $48 billion.

Between July and September 2020, the nation added ¢10.7 billion to its public debt stock.

The rising debt though a worry has been precipitated by the impact of covid-19 whereby the nation had to borrow extra to finance the budget and also support Micro, Small and Medium Scale Enterprises who were heavily impacted by covid-19.

Following this occurrence, the Professor noted that borrowing in itself is inevitable in every economy.

However, if monies contracted are spent more on consumption other than productive sectors of the economy, the country will be compelled to engage in more borrowing to support various sectors.

“In that case, your growth can be confounded to the extent that the private sector and individuals will not get access to loans that will help to expand the productive livers of the economy,” he said.

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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.