Ghana’s debt crosses 80% debt-to-GDP ratio, ends 2021 at GH¢351.8bn

Ghana’s debt continued to reach unsustainable levels, as it hit GH¢351.8 billion in 2021, crossing the 80% debt-to-GDP ratio mark, the Bank of Ghana’s March 2022 Summary of Economic and Financial Statement pointed out.

Already, the International Monetary Fund April 2021 Fiscal Monitor is forecasting that Ghana’s debt to GDP ratio will surge to 83.2% in 2022, and then further to 84.8%, 86.0% and 86.6% in 2023, 2024 and 2025 respectively. It will however fall marginally to 85.5% in 2026.

According to the figures from the Central Bank, about GH¢730 million fresh loans were added to the total public debt stock in December 2021.

The increment may partly be due to the depreciation of the cedi during the last two months of 2021, which consequently increased the external debt component.

From the figures, the domestic debt went up to GH¢181.8 billion in December 2021, from GH¢179.4 billion in November 2021. This is equivalent to 41.4% of GDP.

Though borrowing from the domestic market is the way to go for now by the government because of the high interest cost that external commercial debt may come with, the continuous borrowing is however crowding out the private sector from access to funds, and consequently keeping lending rates relatively high.

Also, the external component of the total public debt shot up to $28.3 billion (GH¢170.0 billion), from $27.9 billion in November 2021. It however remained unchanged between October 2021 and November 2021.

The debt-to-GDP ratio of the external debt is however equivalent to 38.7% of GDP.

The cedi component shot up by GH¢6.3 billion, primarily due to the decline in the value of the cedi to dollar during the period.

On the other hand, the financial sector resolution bond remained unchanged at GH¢14.9 billion in December 2021, equivalent to 3.4% of GDP.