Impose 60% debt-to-GDP ceiling-Prof Quartey

Professor Peter Quartey, an economist and Director of the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana has proposed the urgent implementation of a 60% debt-to-GDP ceiling to prevent excessive borrowing.
He also called for a strategic framework to ensure that borrowed funds are matched with productive investments that generate returns and drive economic growth.
Speaking at his inaugural lecture as a Fellow of the Ghana Academy of Arts and Sciences, Prof. Quartey said capital projects should be carefully selected through a national development planning process rather than partisan interests.
“We must consider our medium-term strategy and what we want to achieve before taking on new debts,” he advised.
Prof. Quartey emphasized that Ghana’s economic future depends on ensuring that borrowed funds are invested in productive sectors rather than being used for recurrent expenditure. Without these reforms, the country risks further economic instability and a continued cycle of debt without growth.
He noted that despite Ghana’s significant borrowing over the past two decades, expected investments and economic growth have remained elusive.
He stated that much of Ghana’s borrowed funds had been channeled into salaries and loan interest payments rather than productive investments.
His lecture, titled “Debt, Investment, and Growth in Ghana: Did we borrow to consume?”, highlighted the challenges of Ghana’s debt-driven economic strategy.

Rising debt and declining capital investment
Prof. Quartey presented data showing that Ghana’s debt-to-GDP ratio had increased from 42.9% in 2013 to 82.9% in 2023, before dropping to 61.8% in 2024 due to the country’s debt restructuring programme.
In contrast, capital spending—expenditure on long-term investments such as infrastructure and technological advancements—declined significantly.
Capital spending as a percentage of GDP fell from 6.9% in 2010 to just 2.4% in 2023, with a marginal rise to 2.5% in 2024.

“This decline in capital expenditure means fewer investments in critical sectors such as roads, bridges, research, and public infrastructure, which are necessary for long-term economic growth,” Prof. Quartey explained.

Weak project selection and monitoring
A key reason for the low impact of borrowing on economic growth, according to Prof. Quartey, is the weak framework for project selection, appraisal, and monitoring.
He cited examples of government borrowing that failed to generate expected returns due to poor planning and execution.
One striking case was the Pwalugu multi-purpose Dam project. Although $12 million had been disbursed over six years for the project, work had yet to commence on its 25,000-hectare irrigation scheme or its planned 60MW electricity generation in the Upper East Region.
“There is no rigor in the process for project approvals, especially for large projects. These challenges cause major delays in execution, leading to cost overruns and poor outcomes,” he said.
Prof. Quartey also criticized the lack of competitive bidding and poor procurement practices, which have further reduced the efficiency of investments.
He argued that Ghana’s weak project monitoring and evaluation framework has contributed to wasteful spending and uncompleted projects.