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Business News of Tuesday, 30 March 2021

Source: Starr FM

Be conservative with borrowing - Lord Mensah to Ofori-Atta

Economist with the University of Ghana Business School Dr Lord Mensah has cautioned  Finance Minister-designate Ken Ofori-Atta against excessive borrowing from the Eurobond market.

This follows his approval by consensus by the appointments Committee of parliament following a two-day vetting of the nominee.

Speaking to Starr News on expectations for the minister in the next term, Dr Lord Mensah said Mr Ofori-Atta would have to adopt a more conservative approach in dealing with matters of the economy.

He said “going forward, I’m expecting the finance minister to be conserved as much as he can. I was reading in the news today which indicates that he will explore avenues where we can raise bonds at a zero interest rate or coupon rate, what we call the ‘zero-coupon bond’.

“And trust me, our economy, looking at it at this time, I don’t know the cost of funds that we’ll incur if we decide to go and borrow in that manner.”

Dr Lord Mensah noted he “would advise not for him or his management to assume that kind of posture where we going to borrow and all that we looking out for is for the money to end in Ghana, that is how I see it.

“Because if you have an economy, looking at the indicators not being favorable, your debt levels keep going up and you still have an appetite for borrowing, then it gives the signal that you brown but you not aware about the cost.”

“Let’s understand that our debt level rising every now and then might not be the principal that is rising, the principal might be rising as a result of foreign exchange risk and all those, but then we should look at the interest payment.  The interest payment is what is killing us as a country,” he added.

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