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Story by: NAA ANYEMA COLLISON
IFS Warns Against Reckless Borrowing, Urges Self-Reliance in Economic Recovery
The Institute for Fiscal Studies (IFS) in its latest address to the media has cautioned the Mahama led administration against a hasty return to the international bond market, emphasizing the risks of excessive borrowing.
Since 2000 Ghana experienced two significant debt crises with the latest one taking place in 2022 which propelled the nation into a severe financial downturn. The country’s unsustainable debt burden from international bond market dependence resulted in a credit rating downgrade that halted foreign financing access. The Institute cautions that reentering global markets without fixing fiscal problems might trigger another economic collapse.
Rather than depending on external borrowing, it recommends leveraging domestic resources for economic stability. The think tank highlights the Bank of Ghana’s Gold Purchase Program as an example of an initiative that boosts foreign reserves without increasing debt. It further suggests that the government focuses on revenue generation through efficient tax collection and maximizing returns from the extractive sector.
The organization highlighted that strict fiscal management remains crucial to avoid future debt crises.
The Institute for Fiscal Studies recommends the government adopt a conservative spending approach to maintain expenditures below the rate of revenue growth. The approach helped government officials create more transparent budget plans while averting the common problem of overestimated revenue projections that previously resulted in fiscal deficits.
According to a 2021 survey by Ghana statistical Service, about GH₵5 billion in bribes were paid to public officials, making corruption a significant challenge in Ghana’s economic landscape, and there by calling for stronger anti-corruption measures, institutional reforms, and performance-based governance.
The IFS’s warning comes at a critical time as government prepares to read its first budget and economic policy statement by the Minister for Finance, Dr. Cassiel Ato Baah Forson, on Monday March 11, 2025. The think tank insists that only bold and disciplined reforms will ensure long-term financial stability and resilience.
Adoanews.com
