Ghana's public debt stock shot up by ¢27.8 billion in April 2021 and May to ¢332.4 billion, the latest Summary of Economic and Financial Data by the Bank of Ghana has revealed.
This is equivalent to $57.9 billion, about 76.66 percent of Gross Domestic Product (GDP).
In March 2021, the total debt stock stood at ¢304.6 billion, and the significant increase in the debt stock is due to the $3 billion Eurobond raised in March 2021 as well as the huge borrowing on the domestic market.
In April 2021, the public debt stock was ¢328.0 billion. This means ¢23.4 billion new debt was added to the total debt stock.
However, in the recent Government Issuance Calendar, government is expected to slow down its borrowing in the third quarter of this year [July 2021 to September 2021] as it's expected to borrow less than a billion cedi for the entire three months.
The domestic debt went up by ¢7.2 billion to ¢170.8 billion at the end of May 2021 despite some under subscription of Treasury bills sale. This is equivalent to 39.4% of GDP.
The external debt also went up by $3.5 billion (¢20.3 billion) to $28.1 billion. This is approximately 37.2% of GDP.
However, the financial sector debt stood unchanged at ¢15.2 billion, equivalent to 3.5% of GDP.
But the debt could go down if assets of defunct banks are retrieved quickly to offset part of it.
Economic outlook promising but uncertainty hangs on – IMF
The International Monetary Fund in its latest assessment of the Ghanaian economy said the Ghanaian economy was still facing some significant uncertainty in the coming months despite the economic outlook promising.
This is coming following a gradual recovery from COVID-19 shocks that severely hit the economy last year.
"Ghana was hit hard by the COVID-19 pandemic. The government response helped contain the pandemic and support the economy, but at the cost of a record fiscal deficit. The economic outlook is improving, even though risks remain, including from the evolution of the pandemic and rising debt vulnerabilities", IMF Executive Board Article IV Consultation with Ghana indicated.
According to the fund, its assessment is based on the new COVID-19 wave, rising debt stock and large financing needs of government.
The World Bank had also consistently warned that the country was not far from being classified as a Highly Debt Distress Country. This follows the rising debt and high interest payments.
Its sentiment was also shared by ratings agencies Moody's and Fitch.
Per IMF estimation, Ghana's debt to GDP ratio will surge to 83.2% in 2022, and then further to 84.8%, 86.0% and 86.6% in 2023, 2024 and 2025 respectively. It will however drop slightly to 85.5% in 2026.
The country spends about 49% of its tax revenue to settle interest payments.
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