Public debt inches up to GHS 344.5 billion at end-November 2021
Ghana’s total public debt increased marginally by 0.6 percentage points between the month of September and November 2021 – debt stock for December 2021 is unavailable.
The nation’s debt stock as a percentage of Gross Domestic Product (GDP) as at the end of November per the Bank of Ghana’s (BoG) January 2022 Summary of Economic and Financial Data, stood at 78.4 percent as against the 74.9 percent recorded same period last year – November 2020.
The new debt figure translates into some Ghs 344.5 billion ($58.2 billion).
External debt to GDP at end-November 2021 as reported by the BoG, stood at Ghs 165.1 billion ($27.9 billion) – 37.6$ of GDP.
The Ghs 165.1 billion external debt to GDP represents a year-on-year increment of 1.1 per cent from the end-November 2020 figure of Ghs 139.8 billion.
This implies that foreign investors increased their participation in the country’s debt market.
Domestic debt as a percentage of GDP also increased from Ghs 147.3 billion [38.4%] end-November 2020 to Ghs 179.4 billion [40.8%] end-November 2021, marking a 2.4 percentage points increment.
Ghana’s debt stock has been projected to hit 81% of GDP at the end of 2021.
The projected 81 percent debt-to-GDP ratio implies an approximately 2.6 percentage points increase in the country’s total debt stock given that the country’s current debt-to-GDP ratio stands at 78.4 percent.
For this year – 2022 – the debt ratio is expected to increase to 83.2 percent, and further to 84.8 percent, 86.0 percent and 86.6 percent in 2023, 2024 and 2025 respectively.
Ghana downgraded over high pubic debt stock
Ghana’s Long-Term Foreign-Currency Issuer Default Rating (IDR) earlier this month was downgraded from ‘B‘ to ‘B-’ with a negative outlook.
The downgrade of Ghana’s IDRs and Negative Outlook reflect the sovereign’s loss of access to international capital markets in the second-half of 2021, following a pandemic-related [COVID-19] surge in government debt.
The downgrade came in the context of uncertainty about the government’s ability to stabilise debt and against a backdrop of tightening global financing conditions.
“In our view, Ghana’s ability to deliver on planned fiscal consolidation efforts could be hindered by the heavier reliance on domestic debt issuance with higher interest costs, in the context of an already exceptionally high interest expenditure to revenue ratio,” said Fitch.