Ghana’s public debt surges to GHS 569.3bn reaching 71.1% of GDP in April 2023
Ghana’s public debt has reached an unprecedented high, surging to GHS 569.3 billion in April 2023, equivalent to a staggering 71.1% of Gross Domestic Product (GDP), according to data released by the Bank of Ghana. The significant increase of GHS 134.7 billion in the first four months of the year has raised alarms, with market observers closely monitoring the nation’s fiscal stability.
The soaring debt stock was primarily attributed to the depreciation of the cedi during the said period and a moderate expansion in domestic debt, which amounted to GHS 15.9 billion. The resultant impact of these factors underscores the urgency for the government to implement measures to address the mounting fiscal challenges.
Measured in dollar terms, Ghana’s debt stock now stands at a substantial $52 billion, signifying the gravity of the situation and the scale of the fiscal headwinds facing the country. In comparison, the debt stock stood at GHS 434.6 billion, representing approximately 71.2% of GDP, at the end of December 2022, reflecting an alarming escalation within a relatively short span.
The Bank of Ghana’s July 2023 Summary of Economic and Financial Data further revealed the trajectory of the debt burden, showing consecutive increases in January, February, and March 2023, reaching GHS 547.8 billion ($50.7 billion), GHS 564.1 billion ($51.2 billion), and GHS 569.5 billion ($51.7 billion), respectively.
Examining the components of the total public debt, the external portion amounted to $29.3 billion (¢321.4 billion) in April 2023, marking an uptick from $29.0 billion (¢240.9 billion) reported in December 2022, underscoring the strain on external liabilities.
In contrast, the domestic debt surged to ¢247.9 billion by the end of April 2023, comprising approximately 30.9% of GDP. This represented a notable shift from the GHS 232.3 billion figure reported in December 2022, which accounted for around 38.1% of GDP.
The rise in Ghana’s nominal GDP by GHS 190.7 billion between December 2022 and April 2023 was driven by increased prices of goods and services within the country, spurred by persistently high inflation rates.
As the nation grapples with this mounting fiscal challenge, the government’s efforts to restructure domestic debt and secure the $3 billion Extended Credit Facility (ECF) programme approval from the International Monetary Fund indicate a commitment to address the debt burden.
Nevertheless, Ghana’s path towards fiscal stability hinges on successful negotiations with external creditors and the implementation of sustainable fiscal policies to navigate the current financial landscape and ensure a prosperous economic future.
