Ghana’s public debt stock hit GH¢341.8 billion as of the end of September, 2021, the November, 2021 Bank of Ghana Summary of Economic and Financial Data has revealed.
This is equivalent to 77.8% of Gross Domestic Product (GDP) and confirms concerns by analysts and economists that the country’s debt has reached alarming levels.
Between July and September, 2021, GH¢5.9 billion fresh loans were added to the total debt.
The surge in the debt came largely from the domestic debt and also as a result of the slight depreciation of the cedi to the dollar.
However, the government had indicated in its Issuance Calendar for the final quarter of 2021 that it will borrow just about a billion cedis, and therefore many market watchers, analysts and economists will be hoping the debt level for the final quarter of this year will at least remain stable from the present level.
According to the data from the Bank of Ghana, the domestic debt went up to GH¢178.1 billion in September, 2021, up from GH¢173.9 billion recorded in July, 2021. This is equivalent to 40.5% of GDP.
The resultant consequence is the ‘crowding out effect” whereby businesses are competing for borrowed funds with the government.
Importantly, the financial sector resolution bond stayed same at GH¢14.9 billion in September, 2021. This is equivalent to 3.4% of GDP.
For the external debt, it fell by $100m in August to $27.9 billion in September, 2021, equivalent to 37.2% of GDP.
However, the cedi component of the external debt shot up because of the decline in the value of the cedi to dollar.
Ghana’s economy expanded by 3.9% in quarter 2 2021
Ghana’s economy expanded by 3.9% in the second quarter of this year, according to provisional figures from the Ghana Statistical Service.
During the same period last year when Covid-19 had emerged, the Gross Domestic Product (GDP) growth rate was -5.7%.
However, GDP growth rate without oil and gas (Non-Oil GDP) for second quarter 2021 was 5.2%, which is against a growth rate of -5.8% recorded the same period last year.
According to the figures, the increase in the Gross Domestic Product (GDP) growth rate was driven by a strong pick-up in the Services and Agriculture sectors.
The Health and Social Work (20.75%), Information and Communication Technology (20%), Hotel and Restaurants (18.7%) as well as Fishing (12.7%) Sub-sectors expanded significantly.
Economic outlook promising but uncertainty hangs on – IMF
The International Monetary Fund in its latest assessment of the Ghanaian economy said the Ghanaian economy is still facing some significant uncertainty in the coming months despite the economic outlook promising.
This followed 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.