Lecturer at the Department of Economics at the University of Ghana, Dr. Adu Owusu Sarkodie, has opined that it will be unfair to criticize the Government for borrowing amid the devastating effects of COVID-19 on the economy.
Dr. Sarkodie expressed that many countries have been hit hard by the effects of COVID-19 that some are even finding it difficult to rise.
Speaking in an interview with Samuel Eshun on the Happy Morning Show, he said: “Prior to COVID, I would have criticized the government for borrowing. But I am careful because of the times that have changed. I am careful about criticizing the Government in terms of borrowing. We will not advise the Government to cut down expenditure. That one is a no go area because that is what will fuel the economy’.
He shared that in these difficult times of pandemic, the Government needs to spend on things such as stimulus packages as other countries will do and that can only be possible if the expenditure matches the revenue.
“In many countries, the stimulus package is about spending. So as an economist, there is no way I will advise the government not to spend. In advising the government to keep spending, if your revenues do not match the expenditure, what do you do? It is about financing. Do you do foreign financing or domestic financing? Some people even print to finance. So this is the situation we find ourselves.
The government must spend and the government must borrow from external sources and domestic sources to finance the deficits. And that is rightly so. I don’t see in any economics book which will argue against borrowing to grow the economy in these difficult times; in this economic slowdown.”
In April this year, the Executive Board of the International Monetary Fund (IMF) approved the disbursement of SDR 738 million (about US$1 billion) to be drawn under the Rapid Credit Facility (RCF) to help address the urgent fiscal and balance of payments needs that Ghana faced, to improve confidence, and catalyze support from other development partners.