Ghana’s public debt balloons to GH¢332.4bn
Ghana’s public debt stock has increased to GH¢332.4 billion after seeing an additional debt of ¢27.8 billion in April and May 2021.
At the end of the first quarter, the country’s debt was GH¢ 304.6 billion implying a percentage increment of 9.2%.
According to figures from the recent Summary of Economic and Financial Data by the Bank of Ghana (BoG), the increase has brought the debt to Gross Domestic Product (GDP) ratio to 76.6%.
This is slightly higher than the debt to GDP ratio of 76.1% recorded at the end of 2020, the BoG data shows.
The significant increase in the debt stock is attributed to the $3 billion Eurobond raised in March 2021, in addition to the quantum of borrowing on the domestic market.
“External and domestic financing conditions tightened considerably at the start of the pandemic, but have improved since, and Ghana successfully returned to international capital markets for a $3 billion Eurobond issuance in March 2021.”
This was contained in the International Monetary Fund (IMF) July 2021 Article IV Consultation Report on the economic outlook on Ghana.
Meanwhile, per the data provided by the Central Bank, both domestic and external debts saw an increase, also contributing to the rise in the debt stock.
The domestic debt went up by GH¢7.2 billion to GH¢170.8 billion at the end of May 2021, which is equivalent to 39.4% of GDP.
The domestic component of the total public debt contains the financial sector resolution bond, which was GH¢ 15.2 billion at the end of May 2021.
Similarly, the external debt also rose by $3.5 billion (GH¢20.3 billion) to $28.1 billion, which is approximately 37.2% of GDP.
IMF Article IV Consultation Report
Already, IMF is predicting that the country’s debt to GDP ratio would hit 83.55 by the end of 2021.
In the July assessment of the country’s economic outlook, IMF stated that, despite the improvement recorded, Ghana’s economic outlook remained uncertain due to risks from the evolution of the pandemic and rising debt vulnerabilities.
“An economic recovery is underway. Growth is expected to rebound to 4.7% in 2021, supported by a strong cocoa season and mining and services activity, and inflation remaining within the Bank of Ghana target,” the report stated.
The IMF pointed out that, “this outlook is subject to significant uncertainty, including from new pandemic waves and risks associated with large financing needs and increasing public debt.”
Finance Minister confident of speedy economic recovery
Despite the economic hard times, the Finance Minister, Ken-Ofori-Atta, has expressed optimism that the economy would see a major transformation as it implement the economic recovery plan.
This economic recovery is being championed through the Ghana COVID-19 Alleviation and Revitalisation of Enterprise Support (Ghana CARES) programme.
The post-COVID programme is to stabilise, revitalise and transform Ghana’s economy to create jobs and prosperity for Ghanaians over a three-year period.
Among other things, the Ghana CARES seeks to support commercial farming and attract educated youth into the venture, build the country’s light manufacturing sector, and fast track its digitalization agenda.
Speaking at the first durbar of the Finance Ministry in April this year, Mr Ofori-Atta, said, “We are at a critical juncture in our development trajectory, which requires the marshalling of resources to mitigate this pandemic’s effects, close our infrastructure gap, and revitalise our economy.”
He reiterated that, pursuing the GH¢100 billion Ghana CARES (Obaatanpa) programme, was the surest way to turn the challenges created by COVID-19 into opportunities for socio-economic transformation.
Mr Ofori-Atta said he was confident that, such measures contained in the Ghana CARES programme would turn around the economic fortunes of the economy and make it more resilient.
He then promised that “he would use the second term of his administration “to put the foundations that would change the country to guarantee opportunities to most, especially, to improve the lot of the underprivileged and disenfranchised.”