SHANGHAI, May 16 (Reuters) - Ghana plans to tap the eurobond market in July, underlining global appetite for emerging market debt but fanning a controversy over whether developing countries that have won debt relief should risk piling up new borrowings.

The long-awaited issue, the first by a sub-Saharan sovereign outside South Africa since the 1970s, is likely to be followed later in the year by Nigeria, according to bankers attending the annual meeting of the African Development Bank.

"We are taking our time to go through everything in May and June so that by July the lead managers and others can then go on to the market," Ghana's finance minister, Kwadwo Baah-Wiredu, told Reuters.

He said lead managers UBS and Citigroup had been mandated to raise between $500 million and $750 million for the West African country, which plans to use the money to develop its energy and telecommunications sectors and for housing and afforestation.

The economy is plagued by power shortages that economists say could make it hard for Ghana to meet its 6 percent growth target this year. Electricity rationing is also pushing up inflation.

Despite economic question marks, analysts say investors' hunger to diversify and lock in high yields means Baah-Wiredu is spot on when he says soundings from the market are very positive.

"Under the current favourable conditions, it will be very well received and most likely highly oversubscribed," said Stuart Culverhouse, chief economist at Exotix, an emerging markets brokerage in London.

Ghana's fund-raising plans cut to the heart of a debate that has dominated this week's meetings of the African Development Bank (AfDB): to borrow or not to borrow?

BORROWER BEWARE

Under the Multilateral Debt Relief Initiative, the International Monetary Fund, World Bank and regional development banks have written off huge sums owed by poor countries. Ghana's total debt was cut by two-thirds last September to $2.1 billion.

Officials from these banks are concerned that governments' eagerness to use their new-found financial flexibility, coupled with investors' eagerness to lend, may lead to another pile-up of unserviceable debt if the proceeds are not invested wisely.

"The challenge to us all is that of ensuring countries are able to access resources that do not impose unsustainable debt burdens and compromise their longer-term external viability," Donald Kaberuka, the president of the African Development Bank, said.

The IMF in particular is concerned about an unmanageable build-up of expensive new debt. A European fund manager said the IMF had strongly objected to a plan by Ivory Coast to sell local-currency-denominated bonds to foreign investors.

Samuel Itam, a senior adviser in the IMF's Africa Department, says borrowing decisions are up to governments, not the IMF.

But he said concessional finance, preferably grants, should be the first port of call for African countries, given the risk that foreign portfolio inflows can just as easily flow out again.

"Failing that, you must then see how you can raise money on the best terms possible. But in any event, we in the fund are advising both creditors as well as debtor countries, including Ghana, please do so within the debt sustainability framework to ensure that you're not going to go back to a serious debt situation," Itam told Reuters.

However, another theme of the conference is how the West has so far failed to meet its pledges to double aid to Africa.

"Donor assistance has not been as robust as had been promised or envisaged, even under the programme that the IMF supported. Therefore, Ghana is faced with the challenge of trying to fill the resource gap," Itam acknowledged.

Against that backdrop, Baah-Wiredu says raising big sums in the bond market is the only way Ghana can finance its extensive infrastructure needs. He wants an end to "piecemeal financing".

"If you get $2 million, what can you use it to do? Or even $5 million? So if you want to fix the telecoms sector, you need to make sure you get a blend of grants, concessionary loans and then commercial loans to fix the issue," he said.