Dr Richmond Atuahene, a banking consultant, says the government’s constant borrowing from treasury bills could put Ghana on a trajectory to recession.

He said that borrowing from the T-bill market was more expensive than borrowing from the bond market since the T-bill market’s interest was greater than the bond market.

He was speaking at the Investment Dialogue which was organised by the Tesah Capital and hosted by an Accra private television station.

He said, “Whenever the short-term yield is higher than the long-term yield, the country heads towards a recession. That is what the literature has said.

“When you were paying a bond at 9 per cent but you could not pay, and your bank’s T-bills were 30 per cent, do you think you could pay? What sort of analysis is this? If you cannot pay your bonds, why do you begin to accumulate short-term debts?”

The banking consultant emphasised that the practice could significantly deny the private sector access to credit, which would culminate in high unemployment due to the absence of job creation.

 “Recent data from the Bank of Ghana showed that credit to the private sector has declined by 10 per cent in real terms. Let the private sector have cheaper funds to turn the economy around. If the Government is borrowing from T-bill and the private sector cannot compete, then we are crowding out businesses and enterprises.

It is a very dangerous thing because there will be no recovery. If there is no recovery, we will have a high unemployment rate because there is no job creation in the country,” he said.

Dr Atuahene said the Government should have treated the energy sector debt as part of the efforts to restructure its debts since the lack of energy could affect economic recovery.

Professor Dennis Nsafoah, a scholar at Niagara University, said the monetization of debts by the Government had been most effective.

However, it has also been the most harmful to households and businesses, particularly low-income groups, due to the disproportionate impact of inflation.

To achieve fiscal consolidation this year, the Professor advised the Government to adopt a balanced approach, incorporating significant reductions in government expenditure.