The country’s total debt stock has hit GH¢214.9 billion ending November 2019.
This was contained in the January 2020 Bank of Ghana’s summary of financial and economic data released Friday.
This was released after the Monetary Policy Committee met earlier this week to review the health of the economy and set a new policy rate for the market, which currently stands at 16 per cent. The rate often influences the cost of credit in the country.
The GH¢214.9 billion total debt represents 62.1 per cent of Ghana’s-Debt-to-GDP ratio ending November 2019.
The $20.3 billion (GH¢111.9 billion) of the debt were borrowings done by the government in dollars and from outside the country (that is the external debt component). This represents 32.4 per cent of the country’s GDP.
On the other hand, GH¢109.2 billion of the debt, was borrowed locally, translating into 29.8 per cent of Ghana’s GDP (Domestic Debt Component).
The financial sector cleanup cost made up about GH¢10.7 billion of the domestic debt stock for the country. This was as a result of bonds that the Government has issued to cover the cost of the financial sector clean-up.
Year-on-Year increases in the total debt stock
The Bank of Ghana report shows that from November 2018 to November 2019, the total debt stock went up by GH¢42 billion to reach GH¢214.9 billion.
The last time the Bank of Ghana released its Economic and Financial data which was in September 2019, the debt stock was about GH¢208.5 billion. This should mean that in two months, the total debt stock has gone up to $6.4 billion.
Possible reasons for the debt stock increase?
The increase in the debt stock over the last two months can be attributed to the cedi’s marginal depreciation and recent funds advanced towards the cleanup of the banking and non-banking sectors of the economy.
JoyBusiness is also learning that bonds that was re-issued to take care of some of the government debt obligations have also accounted for a marginal increase in the total debt stock for last year.
So how much does every Ghanaian owe?
Every Ghanaian in the country could be owing about GH¢7, 163. That’s if the GH¢214.9 billion debt is shared among a population size of about 30 million.
Now this “loosely” means that if the funds that have been borrowed were not invested in projects that can pay for it, then every Ghanaian may be paying about GH¢7, 163, spread over the period to pay this debt.
IMF and Ghana’s Total Debt Stock
The IMF in its recent staff report warned that the country could in medium-term be classified as debt distress country if measures are not taken to manage the debt situation. The Fund expressed concern about
Ghana’s high risk of debt distress, and highlighted the need to strengthen the fiscal rules and phase out off-budget operations. Also, most Directors urged the authorities to avoid new collateralized borrowing to help reduce public debt and improve fiscal transparency.
Directors emphasized that a more ambitious fiscal stance, based on a comprehensive domestic revenue
mobilization strategy, would help anchor debt dynamics on a declining path, contain financing needs, create buffers for contingent liabilities, and support a stronger external position
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