The devastation of COVID-19 has caused the public debt stock to hit a record high of a nominal figure of GH¢291.6 billion, representing 76.1 per cent of GDP as of the end of December 2020.
This is an increment of 13.8% compared to the GH¢218 billion, and equivalent to 62.4% of GDP in 2019.
Minister for Parliamentary Affairs and caretaker Finance Minister, Osei Kyei-Mensah-Bonsu, disclosed this when he presented the government’s 2021 Budget to Parliament last Friday.
Comparative analysis of the public debt build-up since 2004 and the statistics, he said, still indicate the President Akufo-Addo and the NPP government are better managers of the economy and better protectors of the public purse.
According to him, included in the debt stock and the debt/GDP ratio at the end of 2020 are non-recurrent expenditures that the government had to deal with as a matter of urgency.
These include Fiscal Impact of COVID-19 –GH¢19.7 billion; Cost of Financial Sector Clean up –GH¢21 billion; Cost of Excess Capacity Charges paid to IPPs – GH¢12 billion; and the impact of the reduction in growth from an average of 7% (2017-2019) to 0.9% in 2020.
He explained that if these expenditures are excluded and the drop in GDP growth in 2020 primarily attributable to the COVID-19 pandemic is taken into account, the total stock of debt for 2020 would have been approximately GH¢ 238.9 billion, implying a debt to GDP ratio of 58.7%.
“The total debt stock mix was made up of a provisional figure of GH¢141.781 billion for external debt and GH¢149.834 billion for domestic debt, accounting for approximately 48.6 per cent and 51.4 per cent of the total public debt stock, respectively.”
“The external and domestic debt, as a percentage of GDP, represented 37% and 39% respectively.”
He indicated between 2004 and 2008, Ghana’s debt stock increased by 30%; 2008 and 2012, it increased by 269%; between 2012 and 2016, 243%; and between 2016 and 2020, 137%, which includes the cost of the banking sector clean-up, excess capacity charges and the impact of the COVID-19 pandemic.
According to him, despite the impact of the pandemic the rate of growth of the public debt has been lower under the NPP-Akufo-Addo government than under previous governments.
He said, “The rate of debt growth was lower despite massive investments in our flagship programmes such as free SHS, Planting for Food and Jobs (PFJ), NABCO, One District One Factory (1D1F), One Constituency One Ambulance, One Village One Dam (1V1D), restoration of teacher and nursing training allowances amongst others, while maintaining relative macroeconomic and exchange rate stability.”