A financial and investment consultant has expressed dissatisfaction with the allocation of government expenditure.
Sharing his opinion on Joy Business’ Thought Leaders Series, on the topic “Debt exchange and IMF, do or die affair? “ David Tetteh said that “government expenditure has not gone into productive areas to push the Gross Domestic Product (GDP).”
His comment comes after the host asked how the country got into the debt situation and where the receipts from borrowing go such that they do not impact the GDP numbers.
According to the financial and investment consultant, there has been a number of borrowing by the country to settle debts. This, he explained has contributed to the non-significant investment into productive sectors in the country.
“If you look at the last few years, our budget, we have mainly been borrowing and using it to settle our debts. Extending the yield curve and borrowing, issuing bigger sums of Eurobonds just to settle debts,” he explained.
Mr Tetteh said one of the tools used to stimulate GDP growth is government’s expenditure. Therefore, it is expected for government to spend to kick-start growth in the economy.
He, however, stated that the “multiplier is clearly low in Ghana.”
Meanwhile, a high-powered government delegation will visit China later this week to convince authorities there to accept Ghana’s proposal for debt cancellation with the Paris Club.
It is part of the government’s restructuring of its external debts.
Ghana is hoping to restructure $5.7 billion, with China holding a third of it amounting to $1.7 billion.
Finance Minister Ken Ofori-Atta who is leading the delegation told Svenja Schulze, a German Minister that China has committed to a bilateral negotiation.
In view of that, he is hopeful a deal can be reached to enable Ghana to present her case before the International Monetary Fund (IMF) board.
“The big elephant in the room is China, as in how they will comport themselves in the comparability of treatment because China wants to do bilateral. We would be visiting China by the end of the week to really discuss how they can envelope as quickly as possible,” he said.
The German Federal Minister for Economic Cooperation Svenja Schulze says her country will assist Ghana to get fair treatment at the Paris club.
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