According to the Institute for Fiscal Studies (IFS), if the government keeps using domestic financing for the national budget, Ghana’s economic problems would only grow worse.
IFS claims that because the government is unable to access the Eurobond market, the private sector is facing fierce competition for budget-funding loans, which could eventually result in a lack of investible capital for the private sector.
Acting Executive Director for IFS Dr. Said Boakye urged resilient measures to spur economic growth during a news briefing on a review of Ghana’s current fiscal and macroeconomic performance.
“It is concerning that the country is currently financing the national budget at a higher level domestically since it is unable to access the Eurobond market because of the death crisis. The government is now more fiercely vying with the local private sector for loanable cash, he explained as the reason.
According to Dr. Boakye, this would probably result in a lack of capital that the private sector may invest in, which will keep interest rates high and perpetuate the existing slow economic development and high unemployment rates.
“This necessitates taking proactive steps to address detrimental physical fundamentals like insufficient revenue generation, excessive fiscal rigidities, corruption, and decisions influenced by politics.”
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