U.S.-Based Finance Professor Cautions Gov’t Against Excessive Borrowing Despite Improved Credit Rating

Ghana is basking in the positive news of its recent credit rating upgrade by Fitch Ratings but not without caution as U.S.-based finance professor is advising the government to tread cautiously and avoid misinterpreting the improvement as a green light for excessive borrowing.

Fitch Ratings has recently upgraded Ghana’s credit ratings from Restricted Default to B- with a Stable Outlook signaling that the country is on the right path to economic recovery.

Professor Pat Obi, finance professor at Purdue University Northwest in the United States, who has served as a visiting professor at GIMPA, University of Ghana, and KNUST on various occasions since 2008, says while the development marks a turning point in the country’s economic recovery efforts, it must not become an opportunity to repeat past mistakes.

He tells The High Street Journal that an improved credit ratings after a difficult past should not warrant another era of excessive borrowing which could plunge the economy back into difficulties.

“A better credit rating doesn’t suggest we should go back on a borrowing spree,” Prof. Obi cautioned.

Amid the caution, Prof. Pat Obi also revealed that the upgrade comes with enormous benefits to the economy which cannot be underestimated. He says the upgrade sends a positive signal to the markets, improving both business and investor confidence.

“It does signal to investors, businesses, and everyday Ghanaians that the country is making progress. It’s a vote of confidence of some sort. Such a positive signal can boost both investor and consumer confidence, which is a powerful ingredient for economic growth,” he explained.

Ghana had previously been rated Restricted Default by Fitch, reflecting its inability to meet debt obligations. The recent upgrade moves the country back into the speculative grade category, signaling a degree of restored investor trust following the implementation of domestic debt restructuring and macroeconomic stabilization measures under the IMF-supported program.

This caution from the finance professor comes since the improved credit ratings could fuel the tendency for the government to borrow at a time that it is already contemplating a return to international capital markets.

Already some analysts have advised that any future borrowing must be carefully structured, highly targeted, and rooted in productivity-enhancing sectors such as energy, agriculture, and infrastructure, not for consumption or political expediency.

Ghana’s debt-to-GDP ratio remains elevated, and despite progress made under the IMF programme, the road to full recovery is still long. With external debt restructuring talks ongoing, economists insist that the country’s ability to maintain a positive trajectory will depend largely on sustained fiscal discipline, policy consistency, and public sector efficiency.

Prof. Obi’s comments serve as both a commendation and a caution that while Fitch’s upgrade is welcome news, it should not warrant any act that can put the gains made in jeopardy.

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