Accra: Professor Peter Quartey, the Director of the Institute of Statistical, Social and Economic Research (ISSER), has warned against Ghana’s immediate return to the capital market, citing high interest rates as a significant concern. This caution comes in light of President John Mahama’s announcement regarding the country’s intentions to borrow from both domestic and international markets.
According to Ghana News Agency, Professor Quartey explained during an Economic Dialogue organized in Accra that Ghana’s current status is not conducive to obtaining loans at favorable rates. He emphasized that Ghana is still considered a risky country, and borrowing under such circumstances would result in higher interest rates compared to non-risk countries. The country was barred from the international capital market in 2022 following downgrades in its creditworthiness and ability to meet long-term debt obligations by rating agencies.
Despite recent economic improvements, which have led to an upgrade in Ghana’s credit rating by Standard and Poor (S and P) Global Ratings to CCC+ from Selective Default, Professor Quartey urged caution. He advised that Ghana should only return to borrowing once it achieves a status viewed as favorable by international and investor communities, ensuring more reasonable interest rates.
Professor Quartey acknowledged the government’s need for funds to support its ‘Big Push’ agenda and other developmental projects but emphasized the importance of avoiding borrowing at punitive interest rates. The government’s intention to return to the capital market would be carried out with caution, according to Mr. Seth Terkper, Presidential Advisor on the Economy. He highlighted the necessity of directing borrowed funds towards projects capable of repaying the loans.
Mr. Terkper mentioned that Ghana has begun investing in the Sinking and Stabilisation Funds to manage debt, which is part of the rationale behind the government’s plan to re-enter the capital market. Meanwhile, Mr. Osei Gyasi, a Director at the Bank of Ghana, noted that recent economic developments have renewed investor confidence, as evidenced by the credit rating upgrade from S and P. However, he warned that fiscal pressures, currency volatility, and the global economic environment still pose risks, calling for consistent policy execution and structural reforms to maintain the gains made.