Ghana: Debt-to-GDP ratio projected to hit 84.6% at end-2022
Ghana’s debt as a percentage of Gross Domestic Product (GDP) is expected to reach 84.6% this year.
This is according to the IMF in its April 2022 Fiscal Monitor report.
In the said report, the IMF asserts that the country’s debt-to-GDP ratio will increase from the projected 84.6% in 2022 to 88.4% in 2026, before falling to 87.4% in 2027.
But prior to that it will record relatively same debt-to-GDP ratio of 84% in 2022 and 2023, and later surge to 85% and 86% in 2024 and 2025 respectively.
According to the Fund, the rising debt may constrain government financing and as a result affect capital expenditure, unless government moves fast to shore up revenue.
The government will also have to intensify its expenditure rationalization programme to ensure there is value for money projects.
Regarding the country’s tax revenues, the IMF is projecting tax revenue to GDP ratio to increase in 2022 to 16.5% from 14.7% in 2021.
This, the Fund says will be a vast improvement compared to the rates registered during the last 10 years.
“In 2023 and 2024, the country’s tax-to-GDP ratio will however fall to 16% and 16.2% respectively,” added the IMF.
Public debt climbs to 80.1% of GDP end-2021
In its Summary of Economic and Financial Data report for March 2022, the Bank of Ghana (BoG) pegged the country’s total public debt as a percentage to Gross Domestic Product (GDP) at 80.1% at end-December 2021.
In nominal terms, this translates into some GHS 351.8bn, an increase of GHS 10bn from the GHS 341.8bn (77.8% of GDP) total public debt recorded in September 2021.
On a year-on-year basis, the country’s debt marks an increase of GHS 60.2bn – from December 2020 to December 2021.
Accounting for the chunk of the country’s public debt was domestic debt which has now increased to GHS 181.8bn from the GHS 178.1bn recorded in September 2021.
On a year-on-year basis (Dec. 2020 – Dec. 2021), that represents an increase of GHS 32bn.
Domestic debt as a percentage of GDP as at end-December 2021, stood at 41.4%.
External debt under the review period also increased to GHS 170bn from GHS 163.7bn in September 2021.
On a year-on-year basis (Dec. 2020 – Dec. 2021), external debt grew from GHS 141.8bn to GHS 170bn.
As a percentage of GDP, external debt as at end-December 2021, stood at 38.7%.
