External debt service payments increased by 26.8% in Q2 2021 – BoG says
Debt service payments (principal and interests) on publicly-guaranteed external debts for the second quarter of 2021 the Bank of Ghana notes, amounted to $545.39 million.
According to the BoG, the amount was $115.27 million (26.8%) more than the payment of $430.12 made in the first quarter of 2021, adding that it is, however, $2.26 million (0.4%) lower than the payment of $547.65 million made in the second quarter of 2020.
Payments in the review quarter, the Central Bank asserts in its Q2 2021 Quarterly Bulletin, comprised the principal repayment of $285.30 million and interest expense of $260.09 million.
The multilateral group of creditors were paid $27.59 million in principal repayments, and interest payment of $16.28 million in Q2:2021, compared with principal repayments of $27.24 million and interest payments of $14.87 million made in Q2 2020.
The bilateral creditors received $43.53 million in principal repayments and $5.72 million in interest payments in the review period, compared with US$34.01 and $7.63 million paid as principal and interest, respectively, in Q2:2020.
Commercial creditors were paid $240.70 million in Q2:2021, made up of principal repayments of $214.18 million and interest payments of $26.51 million. These compared with principal repayments of $209.75 million and interest payments of $42.58 million for the same period in 2020.
In addition, a coupon payment of US$211.58 million was made on outstanding Eurobond debt in the review quarter, which was the same as the coupon paid in the corresponding period of 2020.
Meanwhile, interest payments on external loans alone by Ghana according to the World Bank’s International Debt Statistics report stood at $937 million at the end of 2020.
According to the report, interest payments made by Ghana at the end of 2020 represents some 876 percentage points increment in interest payments by the country.
The report reveals that interest payments by Ghana in 2010 amounted to $96 million, but by the year 2020, interest payments on external loans had jumped to $937 million.
The World Bank report further revealed that external debt in real value terms had more than tripled from the period between 2010 to 2020.
The World Bank notes that as of 2010, total external loans in real value terms amounted to $8.3 billion. However, due to the high demand for external loans by the Ghanaian government to finance budget deficits and undertake key programmes, external debt shot up to $31.1 billion in 2020.
Of the total external debts, $23.2 billion are long term-dated debts – that is debts that are to be repaid beyond 1 year and more. The remaining $5.03 billion are short term-dated debts – that is debts that are to be repaid within a year.
A breakdown of the country’s external debt by the report further revealed that Ghana owes private creditors $14.1 billion, multilateral creditors a total of $6.4 billion with the IMF owed $2.6 billion and the World Bank $4.4 billion.
The country also as of end-2020 owed foreign bondholders $9 billion.
Currently, Ghana’s external debt stands at Ghs 162.5 billion ($28 billion) at end-July 2021 marking a reduction in external debts due to less demand for foreign loans.
