Professor Peter Quartey of the Institute of Statistical Social and Economic Research (ISSER), University of Ghana, has urged policymakers to impose a strict debt ceiling, implement prudent financial management strategies, and strengthen institutional oversight over the country’s resources.

He also emphasized the need for greater transparency in public procurement and better planning for capital projects to avoid misallocation of resources.

Prof. Quartey made the recommendations during the 2025 Ghana Academy of Arts and Sciences Inaugural Lecture, where he analyzed the nation’s borrowing practices and their effects on investment and growth under the theme “Debt, Investment, and Growth in Ghana: Did We Borrow to Consume?”

He questioned whether Ghana’s increasing debt levels have translated into productive investments and concluded that they largely have not.

Over the last decade, Ghana’s debt-to-GDP ratio has soared to unsustainable levels. While borrowing is a crucial tool for development financing, Prof. Quartey stressed that its benefits depend on how effectively funds are allocated. He warned that excessive debt can act as a “tax on investment,” discouraging economic growth if not properly managed.

Ghana’s capital expenditure, which should ideally drive infrastructure and economic expansion, has declined significantly. In 2010, it stood at 6.9% of GDP, but by 2023, it had dropped to just 2.4%. Despite securing substantial loans, the country has struggled to invest in long-term growth projects.

Using case studies, he illustrated the importance of financial discipline, comparing an extravagant entrepreneur who squandered his fortune to Ronald Read, a modest janitor who accumulated wealth through strategic investing. He noted that financial success hinges more on discipline than intelligence, a principle that applies to national economic management.

Ghana has undertaken several major projects funded by external loans, including the Sinohydro and Afreximbank agreements. However, many have faced delays and cost overruns. He cited the Pwalugu Multi-Purpose Dam project, which remains stalled six years after its approval, raising concerns about the efficiency of public investment.

Prof. Quartey highlighted Ghana’s shift from concessional multilateral loans to expensive international capital markets, stressing the need to assess whether borrowed funds have been invested in high-return projects or merely used to service existing debts and fund recurrent expenditure.

He cautioned against the government returning to the capital market soon, stating, “The efficiency of investment is paramount. Ghana’s challenge is not merely borrowing but how the funds are allocated and managed.”

Beyond advocating for a debt ceiling, he called for stronger public financial management and diversification of exports to reduce reliance on external borrowing.