The 13.7 percentage points year-on-year (YoY) increment in the nation’s public debt stock has been mainly attributed to the impact of the Covid-19 pandemic on the economy by Minister for Finance, Ken Ofori-Atta.
According to the Minister, had it not been for the pandemic, Ghana’s current debt stock as a ratio of Gross Domestic Product (GDP) would have been 58.7 percent and not 76.1 percent.
Included in the debt stock and debt-to-GDP ratio at end-2020 are the following non-recurrent burdens that we had to deal with as a matter of urgency, a fiscal impact of Ghs 25.2 billion due to Covid-19, financial sector costs of Ghs 21 billion, costs of excess capacity charges of Ghs 12 billion paid to Independent Power Producers (IPPs) and reduction in growth from an average of 7 percent to 0.4 percent in 2020, stated the Minister.
He continued saying, If these are excluded and the drop in GDP which is primarily attributable to Covid-19 are taken into account, the debt stock for 2020 would have approximately been Ghs 239 billion, implying a debt-to-GDP of 58.7 percent which is below the ECOWAS ratio of 70 percent to GDP.
Speaking at a press briefing on Sunday, May 9, on the back of the massive social media campaign dubbed #FixTheCountry by which the Ghanaian youth are demanding for good roads, quality education, better healthcare systems, jobs among others, the Finance Minister noted that despite the huge YoY increment in the nation’s debt stock occasioned by the Covid-19 pandemic, the rate of growth of the nation’s debt has been slower under the current administration compared to previous administrations.
Inspite of the impact of the pandemic, the rate of growth of debt has been lower under this government than previous administrations, the rate was lower despite massive investments in flagship programmes like Free SHS, NABCo, 1D1F, 1V1D among others while maintaining macroeconomic and exchange rate stability.
To put things in perspective, between 2004 and 2008 the debt stock increased by 30 percent, between 2008 and 2012 it increased by 269 percent, increased by 243 percent between 2012 and 2016, and by 137 percent between 2016 and 2020. And this includes the impact of covid-19, the banking sector and the excess capacity charges paid Independent Power Producers,” stated the Minister.
Speaking further at the press briefing, the Minister noted that government will work to address issues raised by the youth in the #FixTheCountry campaign.
Presently, Ghana’s debt stock as a ratio of GDP stands at 76.1 percent, which in monetary terms, translates into some Ghs 291 billion.
