Professor Peter Quartey, the Director, Institute of Statistical, Social and Economic Research (ISSER), on Wednesday, cautioned against government’s immediate return to the capital market, citing high interest rates.
The Development Economist said this on the back of President John Mahama’s notice of Ghana’s plan to borrow from both the domestic and international markets.
The country’s status was not ideal for such loans, Prof Quartey said in an interview with the Ghana News Agency on the sidelines of an Economic Dialogue organised in Accra by the Graphic Communications Group Ltd and Ecobank.
“We are not on the B level yet. It means we are still classified as a risky country, and for risky countries, when you go to borrow, your interest rate is a bit higher than if you were classified as a non-risk country,” he said.
Ghana was locked out of the international capital market in 2022, with rating agencies downgrading the country’s overall creditworthiness and ability to meet its long-term debt obligations.
On the back of recent economic gains, Standard and Poor’s (S&P) Global Ratings has upgraded Ghana’s credit rating to CCC+ from Selective Default, a move that has contributed to the Government’s quest to return to the capital market.
“Let’s make sure we get to a certain level where the international and investor community will see us as favourable. Then, when we go to borrow, we will borrow at reasonable interest rates,” Prof Quartey advised.
He stated that while the Government’s “Big Push” agenda and other developmental projects required money, “there is no need to rush to borrow at very punitive interest rates.”
Mr Seth Terkper, Presidential Advisor on the Economy, said the plan of government to return to the capital market would come with caution, adding that such a platform would enable the Government to borrow for longer periods.
“As the President has said, when we start borrowing, we should channel it towards projects that can pay for the loan, or put some money outside, so that if it’s social infrastructure, then we can develop it,” he said.
“We’ve started putting money into the Sinking and Stabilisation Funds, and we’re using this to pay down the debt, and it’s part of the reason for the government’s return to the capital market,” Mr Terkper said.
Mr Osei Gyasi, a Director at the Bank of Ghana, said recent economic developments had led to renewed investor confidence, culminating in an upgrade of Ghana’s credit rating by S&P from ‘selective default’ to ‘CCC+’
He noted that fiscal pressures, currency volatility, and the global economic environment still posed significant risks, and called for consistent policy execution, deep structural reforms and collective national resolve to sustain the gains.
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