Ghana’s total public debt stock has risen by GHS54.8 billion in the first nine months of this year, hitting GHS273.8 billion as at the end of September 2020.
Government is currently under pressure to slow down the rate of debt accumulation.
The new debt figure pushes Ghana’s debt to GDP ratio to 71 percent, crossing the dreaded 70 percent threshold for the first time since December 2016 when the figure stood at 73.3 percent.
According to the latest Summary of Macroeconomic and Financial Data from the Bank of Ghana, the total public debt stock which started the year at GHS219.6 billion, has increased by 26.7 percent within nine months.
Debt accumulation for the first 9 months of 2017, 2018 and 2019 however rose by 8.9 percent, 17.2 percent and 18 percent respectively.
A breakdown of the debt numbers shows that GHS 138.5 billion of the debt were secured from outside the country, this is about 35.9 percent of the total value of the economy.
On the other hand, GHS135.3 billion was secured locally. This represents, 35.1 percent of GDP.
Speaking to Citi Business News on the development, economist with Databank, Courage Martey, while predicting that Ghana could end the year at 74 percent Debt-to-GDP ratio if nothing is done, called for an urgent need to slow down the rate of debt accumulation.
“At the rate we are going, we might just hit 74% Debt-to-GDP ratio by the end of 2020, and that doesn’t make for a comfortable outlook at all. For me, the big issue is that, if you look at the growth in the debt stock year-on-year, you will realize that debt stock has increased by 31 percent year-on-year. Now you need revenue to service your debt obligations, but if you look at your revenue growth analysis, on a year-on-year basis we can see our revenue has declined by 1.3 % for obvious reasons.”
“This tells you that while our debt obligation has increased, our capacity to service this debt has weakened, because of the decline in revenue. And this is a significant threat to debt sustainability and on this count for me, is where we have to be very cautious and slow down the rate of debt accumulation,” he added.