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By
Eunice Hilda Ampomah / Princess Grace Tarwo, RNG
Accra, June 7, GNA – Economists Called
on African states to be cautious with excessive borrowing from the outside
investors as this could pose a serious threat to their economies.
Mr. Tirivangani Mutazu, Policy Analyst for
Debt Management with African Forum and Network on Debt and Development
(AFRODAD), said that a number of African countries have difficulties in
service of their debts.
He said some were late, others had
impending debt restructuring, and many others were showing signs of
likelihood of future debt distress.
He said this at a "Forum on Advocacy for Debt"
organized in Accra.
The event, organized by Grbadroots Africa
AFRODAD to discuss debt management and borrowing by African states, has been
on "Questioning Ghana's debt management strategy: lessons to be learned
for the states of West Africa. "
The forum also aimed to highlight
the need to reduce borrowing from external sources and to ensure that debt
management processes were transparent and accountable.
Mr. Mutazu said that about 15% of the African population
in debt and the same fate was expected around 28% of the population.
countries that were at higher risk of over-indebtedness.
He said that only seven percent on more than
53 countries; Uganda, Morocco, Libya, Botswana, Lesotho, Rwanda, Senegal and Tanzania
faced a low risk of debt crisis.
Mr. Mutazu said that the current debt service,
which was the repayment of interest and principal, absorbed 20% of the
governments' annual budgets and, as a result, some countries have budgetary difficulties
space to focus on important government issues such as poverty alleviation and
achievement of national development plans and sustainable development goals.
To the extent that the loan could promote growth
and serve as a useful development tool, unsustainable borrowing could be a
problem, particularly for countries with low investment and
lower than expected maintenance potential, he said.
This, he said, was a major development
obstacle that has led countries to fall behind in their commitments to
global development plans.
Mutazu recommended that Ghana continue
improve the management of its sustainable debt strategies, set
weaknesses in the financial sector and apply the law on fiscal responsibility recently
adopted by Parliament to keep the public debt below the threshold of
65% of the gross domestic product.
Mr. Johnson Wilson Appiah Kubi, Economist
who presented an AFRODAD report on "Processes and management of loan contraction",
the public loan had advantages because it was a risk-free investment
option for investors and fund managers whose key objective was the security of
their investment.
He said that it also helped to develop the market
infrastructure such as the legal framework, improve the efficiency of the payment system
This system has also served as a liquidity management tool for the country.
Central bank.
Mr. Kubi said that it's unfortunate that the
the meager revenues collected in Ghana were used for debt service instead of
spending in vital sectors such as education, health and
Infrastructure.
He said Chad and Mozambique were in debt
distress; and Ghana, the Central African Republic, Senegal and Zambia were at a high level.
risk of over-indebtedness.
GNA
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