Former Finance Chief says Ghana’s 69.7% debt-to-GDP ratio by 2029 projection ‘a bit optimistic’
Former Finance Minister Seth Terkper, speaking at a media dialogue on Ghana’s Economy and the IMF Programme on Friday, April 26, 2024, raised doubts regarding the IMF’s projection of a 69.7% debt-to-GDP ratio for Ghana by 2029.
According to Mr Terkper, the projection is a bit optimistic.
Mr Terkper notes that the current macroeconomic figures and the government’s heavy reliance on the domestic debt market with high interest rates and minimal debt redemption present a different narrative.
In its April 2024 Fiscal Monitor, the Fund said Ghana’s debt-to-GDP will plummet to 69.7% in 2029, marking a 13.9% drop in Ghana’s total public debt over the six-year period from the current debt-to-GDP ratio of 83.6%.
The 69.7% debt-to-GDP ratio in 2029 is higher than the targeted 55% debt-to-GDP ratio under the country’s programme with the Fund.
In 2024, the debt-to-GDP ratio is estimated at 83.6%, whilst that of 2025, 2026, 2027 and 2028 are pegged at 80.9%, 77.9%, 74.9% and 72.0% respectively.
“The numbers speak for themselves and so that means we have a heavy lifting to do, I think the 69% is a bit optimistic for me looking at the numbers and the reliance on T-Bills which have high interest rates, and having not redeemed much of it,” he quipped.
“Of course, we can implement significant reforms on our own to achieve the 55% target but as the IMF projects, it will be around 69% which for me is not much of a comfort zone,” he added.
Meanwhile, Mr Terkper has emphasized the urgent necessity for the Government to institute a structured debt repayment system.
Mr Terkper notes that Ghana cannot solely rely on economic growth to alleviate its debt burdens without such a mechanism in place.
Drawing from his tenure as Finance Minister, he highlighted the efficacy of a sinking fund in curbing debt accumulation, citing its instrumental role in repaying part of a $750 million debt incurred by the previous Kufuor administration.
