By Joshua AMLANU
Ghana must accelerate efforts to diversify its exports to shield its economy from global price fluctuations that strain public finances and drive-up borrowing, Professor Peter Quartey, Director-Institute of Statistical, Social and Economic Research (ISSER), has said.
The nation’s export portfolio is heavily concentrated in three primary commodities: gold, cocoa and oil. According to the Ghana Statistical Service (GSS), these commodities collectively accounted for 83.4 percent of the country’s total exports in 2024.
Speaking at his inaugural lecture on ‘Debt, investment and growth in Ghana: Did we borrow to consume?’ Prof. Quartey underscored the urgent need to move beyond reliance on a narrow range of commodity exports.
The country’s dependence on gold, cocoa and oil as primary foreign exchange earners has left it highly vulnerable to external shocks, he noted.
When prices of these commodities decline, government revenue falls – leading to increased borrowing and fiscal distress.
“Ghana’s experience shows that economies overly dependent on a few exports are highly exposed to volatility in global commodity markets. When prices fall, we see immediate fiscal stress, rising debt and economic instability,” he said.
Debt without growth
Despite years of borrowing to finance development, Ghana has not seen a proportional increase in productive investments, Prof. Quartey observed. Between 2013 and 2023, the country’s debt-to-GDP ratio nearly doubled; reaching 82.9 percent in 2023 before declining slightly to 61.8 percent in 2024.
However, capital investment as a percentage of GDP declined from 6.9 percent in 2010 to just 2.5 percent in 2024.
“For debt to contribute to economic growth, it must be matched with strategic investments in productive sectors. Unfortunately, what we have seen in Ghana is a growing debt burden without a corresponding increase in investment,” he stated.
The mismatch, he explained, has resulted in borrowing primarily serving debt repayment and recurrent expenditure rather than driving long-term economic expansion.
“The lesson is clear – debt is not inherently bad, but how we use it determines whether it becomes a burden or a tool for growth. If Ghana is to avoid future debt crises, it must invest wisely and build a resilient, diversified economy,” he concluded.
A shift in borrowing patterns
Prof. Quartey highlighted a concerning trend in Ghana’s borrowing patterns. The country has increasingly shifted from concessional loans to more expensive commercial debt, including Eurobonds.
Since 2013, the country has issued 16 Eurobonds with interest rates averaging 8 percent —a cost he described as excessive.
He urged government to reduce reliance on costly external borrowing and instead strengthen domestic resource mobilisation.
“Borrowing from the capital market at interest rates of 8 percent to 10 percent is unsustainable. Ghana must improve tax efficiency, expand its revenue base and explore innovative financing options to reduce its dependence on external debt,” he suggested.
To break the cycle of debt-driven economic stress, Prof. Quartey noted the importance of diversifying the export base. By expanding into value-added manufacturing, technology and non-traditional exports, the country can reduce its vulnerability to commodity price swings.
He pointed to countries like Malaysia and Vietnam, which successfully transitioned from commodity-based economies to manufacturing and high-value exports. Ghana, he said, must follow a similar path by investing in agro-processing, industrialisation and digital services.
“Diversifying exports is not just about economic stability – it is about securing Ghana’s future. We need to move beyond exporting raw materials and focus on adding value to our products. This will create jobs, generate higher revenues and reduce our reliance on debt,” he explained.
