#GEF2023: Debt Cap Crucial For Sustainable Growth Beyond IMF Intervention – Dr. Atuahene1 min read
Dr. Atuahene Akwasi Atuahene, an Expert in Corporate Governance and Banking, has proposed a constitutional amendment to incorporate a debt limit or a debt cap.
He said the move would help maintain economic stability and prevent a return to financial instability, ultimately contributing to the overall well-being of the nation post-IMF.
The debt ceiling is a limit on the total amount of government borrowing.
The Organisation for Economic Co-operation and Development (OECD) policy paper 28 (2015) posited that for emerging economies like Ghana, the threshold should even be lower at 30 to 50% debt of GDP as they are exposed to capital flow reversals.
The OECD economic policy paper added that high debt beyond the debt threshold could undermine economic activities and destabilize the economy.
Dr. Atuahene is therefore warning that at higher debt levels, countries like Ghana could lose the accessibility to international capital markets and market confidence, which would increase their borrowing rates steeply.