Why are we taking on more loans when we are already heavily indebted and bankrupt? - Economist

Director of Research at the Institute of Economic Affairs (IEA), Dr John Kwakye, has questioned why the government is keen on loan approvals despite the sour taste of the country's economy.

He opposed Parliament's recent acceptance of a $300 million loan, questioning why the nation's debt load was still increasing.

Dr Kwakye raising his concerns on social media platform X wrote, "Why are we taking on more loans when we are already heavily indebted and bankrupt? Why don’t we depend on our own resources by cutting our coats according to our clothes?”

According to the government, the $300 million loan from the World Bank, is aimed at supporting the First Resilient Recovery Development Policy Financing.

The minority in parliament also opposed the agreement asking the government to withdraw its request for a tax waiver exceeding $449 million. Despite their opposition, the loan was eventually approved.

Finance Minister. Dr. Mohammed Amin Adam assured the minority of his commitment to revisit the tax exemption requests within two weeks leading to the eventual approval of the loan.

“Mr Speaker, let me take this opportunity to clarify a few issues. First of all, this is not an IMF facility, it is a World Bank facility. It is a concessional facility for 25 years. The payment period has a grace period of five years interest of about 1.25 percent and it has a grand element of 26%," Mohammed Amin Adam said while addressing parliament.

Meanwhile, this is not the first time the renowned economist has bemoaned the government's borrowing rate. Dr Kwakye insists that Ghana can go beyond aid when leaders take ownership of the country's vast natural mineral resources.

In his words, "Ghanaians must insist that their future leaders commit to Ghanaian ownership of its mineral wealth. That's the only way to position the country beyond IMF and aid."

NOQ

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