HomeNewsBanking and FinanceGhana’s external debt to hit 78.5% of GDP in 2022 – Report

Ghana’s external debt to hit 78.5% of GDP in 2022 – Report

  • August 26, 2022
  • Posted by: Charles Yeboah Nixon
  • Categories: Banking and Finance, Economics, Finance, Forex
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The about 36% depreciation of the cedi to the dollar as of August 25, 2022 will inflate the country’s external debt-to-Gross Domestic Product (GDP) ratio to a projected 78.5% in 2022.

According to Fitch Solutions, it expects external borrowing to continue, further increasing the already high-interest payments over 2022 and causing the primary income deficit to widen to a forecast 8.2% of GDP, from 4.8% in 2021.

“We expect external borrowing to continue, further increasing already high-interest payments over 2022 and causing the primary income deficit to widen to a forecast 8.2% of GDP, from 4.8% in 2021”.

“In addition, we expect multinationals, which will have benefited from elevated global commodity prices over 2022, to expatriate large profits in quarter one, 2023 (the period during which Ghana-based multinationals typically repatriate profits), leading to higher outflows and weighing on the primary income account”, it pointed out.

It further stated that net capital flows will remain in negative territory over the second half of 2022 given deteriorating investor sentiment towards Ghanaian assets, as reflected by the currency sell-off and rising bond yields.

“At the same time, Ghana is unable to tap international capital markets to finance the deficit, and this is putting downward pressure on its foreign exchange reserves, which have fallen to $7.7 billion [gross] in June [2022], from $9.8 billion in January [2022]”, it added.

Ghana’s total debt stock hits ¢393.4bn in June 2022

Ghana’s total public debt stock went up marginally by ¢130 million to ¢393.4 billion in June 2022, about 78.3% of Gross Domestic Product, the Summary of Economic and Financial Data by the Bank of Ghana revealed.

This was against a revised ¢392.1 billion (78% of GDP) recorded in March 2022. The earlier figure put out by the Central Bank in May 2022 was ¢391.9 billion.

The external component of the total public debt went up marginally to ¢203.4 billion in June 2022, from ¢201.9 million in March 2022. This was as a result of exchange rate fluctuation.

The debt-to-GDP ratio of the external debt is however approximately 40.5% of GDP.