Banking Consultant Dr. Richmond Atuahene has raised alarm regarding the government’s borrowing policy, expressing concerns that it has pushed the country’s economy toward a recession.
Dr. Atuahene outlined his worries during the Investment Dialogue, emphasising the consequences of the government’s reliance on market borrowing. He argued that the current trend of short-term yields surpassing long-term ones is indicative of an impending economic downturn.
He explained that a recession is officially recognised when a country experiences negative gross domestic product (GDP), increased unemployment rates, declining retail sales, and contraction in income and manufacturing indicators over an extended period.
The discussion, themed “Clarity in the Chaos: What Lies Ahead for the Ghanaian Economy,” addressed the economic challenges facing the country.
Dr. Atuahene pointed out the significance of the yield curve, typically upward-sloping, where short-term yields are lower than long-term yields. However, an inverted yield curve occurs when short-term yields exceed long-term yields, signifying potential economic distress.
He expressed skepticism about the government’s financial decisions, stating, “When we were paying bond at 19%, we could not pay. Now you are buying treasury bills at 30%. What sort of mathematics and calculation is that?”
Dr. Atuahene highlighted the inverted yield curve as a warning sign, stating, “Anytime the economy has more short-term debts and higher yield than long-term, the economy is heading towards recession…Economists will tell you that you are heading for an economic recession.”
