Economist Prof. Lord Mensah has cautioned that excessive spending and accumulating more debt in 2024 may disrupt the economy for the next 22 years.
Speaking in an interview with the media, he expressed concerns about the potential impact of significant budget overruns during election years and Ghana’s challenge in securing long-term debt financing, which could hinder the progress under an International Monetary Fund program this year.
In 2023, the Bond Market witnessed a 57% year-on-year decline in trade volumes, dropping to ¢98 billion. Additionally, restructured bonds have faced undersubscription following the Domestic Debt Exchange Programme.
The government has already announced plans to borrow ¢12.7 billion through treasury bills in January 2024 to address maturing bills.
Prof. Mensah urged the government to avoid overspending leading up to the 2024 elections.
He highlighted the adverse effects of resorting to short-term debt financing in the local market, emphasizing the impact on private sector growth due to the unavailability of international market access.
He stressed that the country must maintain fiscal discipline and prioritize expenditure in 2024 for a successful economic rebound.
Prof. Mensah warned against massive spending to please the electorate, noting the limited capacity to raise funds. He advised the government to prioritize wisely, as failure to do so could result in budget overruns and long-term economic consequences.
Nana Ama Nyamekye/Ahotoronline
