2023 Budget: Cedi depreciation adds GHS 93bn to external debt stock in 2022 alone
Depreciation of the local currency (cedi) has added some GHS 93bn to the country’s external debt stock.
The year-to-date depreciation of the local currency against the dollar and pound, the Finance Minister noted, stands at 54.2% and 48.5% respectively.
Making the disclosure on the floor of Parliament during the presentation of the 2023 Budget Statement, the Minister for Finance, Ken Ofori-Atta, noted the country’s external debt currently stands at GHS 271bn reflecting the impact of the depreciation of the cedi.
According to the Finance Minister, external debt currently represents 44.15% of Gross Domestic Product (GDP).
Domestic debt on the other hand, represents 31.79% of Gross Domestic Product (GDP).
Cumulatively, the country’s debt stock as a proportion of GDP stands at 75.9% which in monetary terms is GHS 467bn.
“Mr. Speaker, provisional debt data as at end September 2022 shows a significant increase in Ghana’s public debt largely due to exogeneous factors. The end-September 2022 provisional figures indicate that total gross public debt stood at GH¢467,371.31 million (US$48,871.34 million), representing approximately 75.9 percent of GDP.
“The domestic debt component is GH¢195,657.60 million, which is 31.79 percent of GDP, whilst external debt is GH¢271,713.71 million, representing 44.15 percent of GDP. The increase in the domestic debt is largely on account of rising interest costs. Domestic debt as a share of total public debt reduced from 51.6 percent in 2021 to 41.9 percent as at end September 2022.
“Mr. Speaker, the external debt as a percentage of the total debt stock is 58.1 percent as at end September 2022. The sharp growth in the external debt stock is largely driven by the depreciation of the local currency. The depreciation of the Ghana cedi added GH¢93,855.15 million to the external debt stock.
“Overall, debt accumulation increased from 20.7 percent in 2021 to 32.7 percent as at end September 2022, reflecting the impact of the depreciation of the Ghana cedi on the external debt side,” the Minister stated.
