Dep. Finance Minister gives reasons for Ghana’s ballooning debt
Deputy Minister for Finance, John Kumah, has assigned reasons for Ghana’s huge debt stock pegged at 78.4% of Gross Domestic Product (GDP) as at November 2021.
In nominal terms, Ghana’s debt stock translates into a little over GHS 344 billion with both the external and domestic debt components amounting to GHS 165 billion and GHS 179 billion respectively.
Speaking at an economic forum held by the Economic Governance Platform in partnership with the Advocates for Christ Ghana, the Deputy Minister highlighted a number of factors that have contributed to the country’s high debt stock.
According to him, unplanned expenditures (covid pandemic) and other factors such as the financial sector clean up exercise, exchange rate, energy sector debt, loans from the World Bank and IMF, the Bank of Ghana Asset Purchase Programme among others are the main contributory factors to Ghana’s high debt stock.
“The clean up exercise caused government GHS 21.5bn, exchange rate depreciation increased debt by GHS 45bn, energy sector debt is GHS 26.4bn, undisbursed loans inherited from the NDC is GHS 6bn, loans from the IMF, World Bank, AfDB and the Bank of Ghana Asset Purchase Programme of GHS 10bn are the fcatrs that have resulted in the high debt stock,” he stated.
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According to the Deputy Minister, the loans taken from the multilateral institutions were necessary to close the GHS 25.5 billion go created by the Covid-19 pandemic.
Speaking further at the forum, the Deputy Minister averred measures are however, being taken by government to reduce the country’s debt stock to sustainable levels.
These measures, he noted are contained in government’s fiscal consolidation measures in the 2022 budget.
“Fiscal consolidation measures outlined in the 2022 budget is to help achieve a 4.7% fiscal deficit and return to a positive primary balance.
“Our target is to post a positive primary balance this year and also reduce the deficit and debt stock. So that makes it a steep slope to work on,” he remarked.
Government has set for itself an end of year fiscal deficit target of 7.5% for this year after ending 2021 with a 12% fiscal deficit.
Ghana, due to its high debt stock and revenue challenges was recently downgraded by Fitch Ratings and Moody’s.
