He urged the government to focus on multilateral financing and to be more aggressive in increasing domestic revenue mobilisation to support the country’s development objectives.

Prof Quartey, a Development Economist, gave the caution during his inaugural lecture as a Fellow of the Ghana Academy of Arts and Sciences in Accra on Thursday.

The lecture was on the topic: “Debt, investment, and growth in Ghana: Did we borrow to consume?” It addressed key issues around Ghana’s debt and development financing.

It was attended by economic and financial professionals, industry players, policymakers, and students from several Senior High Schools.

Dr. Cassiel Ato Baah Forson, the Finance Minister, announced last Tuesday, during the 2025 budget presentation, that the government would cautiously reopen the domestic bond market.

However, Prof. Quartey warned that loans from the capital market had proven to be expensive and unsustainable for Ghana’s development financing.

He urged the government to limit its reliance on such loans.

Ghana’s debt stood at 42.9 per cent in 2013, below the International Monetary Fund’s (IMF) debt sustainability threshold of 50 per cent debt to Gross Domestic Product (GDP).

Since then, the debt has been rising, reaching a record high of 82.9 percent in 2023, before reducing to about 76 percent in 2024.

“Why the rush to go to the capital market?” Prof Quartey questioned, noting that borrowing from the capital market without investing those funds in productive ventures had led to unsustainable debt.

“[The capital market] is where we went to, and we are having these problems. And you still want to quickly finish giving people a haircut and go to the capital market… I want to sound this caution! Borrow less from the capital market and at reasonable interest rates,” he emphasised.

Prof. Quartey urged caution when borrowing, particularly from Eurobonds and other capital market funds, which he described as too expensive and unsustainable.

“We ought to shy away from them. Let us get more multilateral and domestic sources of funding. They are cheaper,” he said.

He lamented the habit of successive governments borrowing at high rates from the capital market and using a significant portion of those funds for public sector salaries and interest payments, particularly since 2015.

Emerita Prof Takyiwaa Manuh, Vice President of the Arts Section of the Ghana Academy of Arts and Sciences, also expressed concern about the country’s debt situation.

She said, “The debtor must eat, but the debtor must be careful of what they eat.”

Prof. Manuh expressed confidence that Prof Quartey’s lecture would spark further discussions to help improve the country’s finances.

She called on policymakers to consider and implement policy proposals from academia to improve the living conditions of the people.

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The economic expert explained that, although it is a good initiative, the country may not be able to achieve anything significant with it in the short term. He stated that implementing a 24-hour economy initiative requires a solid foundation of essential infrastructure, including reliable energy (power) and robust security measures.

Unfortunately, he noted that these critical components are currently lacking, necessitating significant investment of time and resources to develop them.

Demand

He made these remarks at the launch of the State of the Ghanaian Economy Report (SGER) 2023 and a review of the third-quarter 2024 economic performance in Accra on Tuesday, October 29.

The ISSER director stated that there is no demand for factories in the country to increase capacity by 100 percent as part of the 24-hour economy initiative.

“The 24-hour economy is a good thing, but unfortunately, we may not be able to achieve anything with it. If all the factories were to produce 24 hours or increase their demand by 50 percent or 100 percent, is there demand for the product?

“So, I think, in my view, not to discourage anybody’s political ambition, but to say that this is a medium- to long-term policy. I do not think it can really kick in. We cannot achieve much with this 24-hour thing. It is a good idea, but we need to put in some structures,” he said.

Manifestos

Prof. Quartey stated that political parties are focused on developing short-term measures in their manifestos instead of creating a long-term plan to guide the country’s development.

“These days, we are fond of manifestos and short-term strategies. We do not have a development plan. So, everyone comes in wanting to change this or that in an experimental manner.

“We need a long-term development plan, and then all of these things can fit in nicely,” he added.

24-hour economy

The 24-hour economy initiative is a flagship campaign promise of the opposition National Democratic Congress (NDC) in the run-up to the 2024 general elections.

According to the NDC, the initiative seeks to unlock the country’s full potential.

A 24-hour economy is a system where businesses and services operate beyond traditional daytime hours, making them available in the evenings, nighttime, and early morning.

This allows for increased flexibility in accessing goods and services and creates more job opportunities, especially for individuals who prefer or are available to work during non-traditional hours.

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According to him, the over-reliance on external financial support erodes Ghana’s policy independence and ultimately impoverishes the nation.

Professor Quartey explained that while foreign aid might appear to be free money, it comes with significant strings attached.

“We receive aid, you will think it is free money but aid is not free; it comes at a cost. Your country loses its independence. Your policies are not independent,” he told the Host, Kojo Yankson on the Super Morning Show on Joy FM on Wednesday, June 19.

Highlighting the detrimental effects of this dependency, Prof Quartey noted that foreign donors often dictate policies, leading to frequent policy reversals and instability.

“Sometimes policies are dictated. So we do not have absolute independence when it comes to policies; that is why we have policy reversals. We introduce a policy and then we remove it,” he said on Thursday.

The imposition of externally influenced policies, according to Prof Quartey, can result in severe socio-economic consequences.

“Sometimes we introduce policies that are very harsh, which brings hardships to the citizens and forces them to jump on the streets to demonstrate,” he said.

Mr Quartey’s assertion comes after the Member of the House of Lords in the United Kingdom, Lord Paul Boateng in his keynote speech at a leadership lecture at the UPSA in Accra said it is time Ghana moves away from reliance on foreign aid.

Lord Boateng indicated that the country will not experience any significant growth since the dependence on external aid hinders progress.

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Speaking on Joy FM’s Super Morning Show, the economist noted that digitising the tax system would improve efficiency in revenue generation and minimise human discretion in tax collection.

While acknowledging that the Ghana Revenue Authority (GRA) and other institutions have digitised some of its tax system, Prof Quartey believes it should be intensified and the tax basket expanded to cover the informal sector.

“We need to raise more revenue domestically, not by imposing higher taxes but by making the existing tax systems more efficient, and we’ve started that with digitization which GRA and the others are doing and I think we need to deepen that.

“And we need to remove the human interface. There is so much discretion when it comes to raising revenue in the country,” he stated.

Mr Quartey’s assertion comes after the Member of the House of Lords in the United Kingdom, Lord Paul Boateng in his keynote speech at a leadership lecture at the UPSA in Accra, said it is time Ghana moves away from reliance on foreign aid.

Lord Boateng indicated that the country will not experience any significant growth since the dependence on external aid hinders progress.

The ISSER Director, who concurs with Lord Boateng, said domestic revenue generation could reduce the country’s dependency on external funding sources.

Another important step to help Ghana achieve financial independence, Prof Quartey believed is for government to reduce its expenditure.

He stressed that even though revenue generation is low, the government often bloated expenditures in its annual budget statements.

Referring to budget statements from 2022 and 2023, he questioned the rationale behind significant expenditure hikes despite revenue challenges.

“We also need to look at our expenditure. I don’t think we are getting value for money for the expenditures, especially for the procurement of goods and services.

“It surprises me that in times of difficulty like this, if you look at the budget statement from 2023, 2022, and even before that we increased expenditure, sometimes, 42%, 30% and you ask yourself, if you are struggling to raise revenue yet your expenditure is still going up, how do you address all the beautiful things you raised in the Ghana Beyond Aid document? We need to go back to the drawing board,” he stated.

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