Early return to capital market will be costly for Ghana – Prof Quartey

Professor Peter Quartey is the Director of the Institute of Statistical, Social and Economic Research (ISSER). On Wednesday, he warned against the government's quick return to the capital market. He cited high interest rates as a concern.

This statement followed President John Mahama's announcement about borrowing plans. Ghana intends to borrow from both domestic and international markets.

Prof Quartey explained that Ghana's current status is not ideal for loans. He spoke with the Ghana News Agency during an Economic Dialogue in Accra. “We are not on the B level yet,” he said.

He noted that Ghana is still seen as a risky country. Risky countries face higher interest rates when borrowing money. In 2022, Ghana was locked out of the international capital market due to downgrades by rating agencies.

Recently, Standard and Poor's (S&P) upgraded Ghana’s credit rating to CCC+. This upgrade came after some economic improvements. It has helped the government in its efforts to return to the capital market.

Prof Quartey advised caution before borrowing again. He emphasized reaching a favorable status first for better interest rates. “There is no need to rush to borrow at very punitive interest rates,” he added.

Mr Seth Terkper, a Presidential Advisor on the Economy, echoed this caution. He stated that returning to the capital market would be done carefully. This platform allows for longer-term borrowing.

He mentioned that borrowed funds should support projects that can repay loans. The government has started investing in Sinking and Stabilisation Funds for debt repayment.

Mr Osei Gyasi from the Bank of Ghana highlighted renewed investor confidence recently. This confidence contributed to S&P upgrading Ghana’s credit rating from ‘selective default’ to ‘CCC+’.

However, he warned about ongoing fiscal pressures and currency volatility risks. Consistent policy execution and structural reforms are essential for sustaining gains, he said.