Austerity advice comes back to Ghana

Ghana asked to enact law to regulate borrowing

A policy think tank has called for a law to regulate excessive government borrowing, as Ghana’s public debt stock rose from 48.03 per cent in 2012 to 60.8 per cent in September 2014.

The Institute of Economic Affairs (IEA) has warned that if a law is not passed to control undue government borrowing, the West African nation risks retrogressing to the 1985 era, described as "a painful period of near economic collapse".

Should we continue on this path [we will] return our nation to where it was some thirty years ago, at the brink of financial collapse

Ghana’s economy, by 1983 was on the brink of collapse due to its huge national debt and high fiscal deficits.

The national debt had reached a catastrophic level of 107.5% of gross domestic product (GDP), inflation was 142%, and commercial banks had stopped lending to commercial enterprises.

The economy was tottering on the precipice of total collapse."We had mismanaged ourselves and were at the brink of total failure," IEA said."We needed help to save ourselves," IEA said."The leaders of the country had no option than to run to the IMF (International Monetary Fund) and the World Bank to seek help to revive Ghana’s sick economy."Should we continue […]

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