IMF ‘exposes’ government; says debt-to-GDP 78% not 76.1%

Ghana’s public debt as a percentage of Gross Domestic Product (GDP) according to the International Monetary Fund (IMF) currently stands at 78 percent.

The figure presented by the IMF in its May 2021 Article IV Consultations paper is in contrast to the 76.1 percent quoted by government official sources such as the Ministry of Finance and the Bank of Ghana (BoG).

The increment in the country’s debt stock is on the account of the inclusion of some Ghs 7.63 billion costs incurred in the energy sector which was excluded by government in its calculation of the debt stock.

A method of debt calculation which former Minister for Finance, Seth Terkper, has described as “parallel data reporting” to the IMF and Ghanaians and publicly spoken against it on several occasions.

“Public debt rose to 78 percent of GDP in 2020, from 64.4 percent in 2019, including ESLA of GHs7.63 billion in 2020,” noted the IMF.

The IMF further notes that government fiscal deficit as at the end of 2020 was 15.5 percent.

“Government interventions in 2020 also exacerbated pre-existing fiscal rigidities and public debt vulnerabilities. The government deficit, including energy and financial sector costs, reached 15.5 percent of GDP,” noted the IMF.

This is also in contrast to the 11.7 percent fiscal deficit quoted by government in the 2021 budget statement – Although government has made it clear that the 11.7 percent deficit excludes the energy and financial sector costs incurred in 2020, it has failed to provide the total deficit incurred in 2020.

Touching on the Covid-19 situation in the country, the IMF Staff Mission led by Carlo Sdralevich which assessed Ghana’s economy to which effect the Article IV Consultations paper was issued, praised government’s efforts in effectively managing the Covid-19 pandemic.

“Ghana has managed very effectively the COVID-19 outbreak in the country, and thus succeeded in protecting lives. Almost 93,000 cases have been confirmed, and unfortunately 780 people have died as of today. The launch of mass vaccine rollout has been a breakthrough, with the administration of approximatively a million doses as of end-May,” Mr Sdralevich noted.

“Policy interventions in 2020 were critical to safeguard livelihoods and paved the way for a faster rebound of economic activity,” he added.

Read below details of the IMF’s Article IV Consultation Paper:

An International Monetary Fund (IMF) mission led by Carlo Sdralevich held consultations under the Article IV during April 28 – May 12, 2021 through virtual meetings. At the conclusion of the mission, Mr. Sdralevich issued the following statement:

“Ghana has managed very effectively the COVID-19 outbreak in the country, and thus succeeded in protecting lives. Almost 93,000 cases have been confirmed, and unfortunately 780 people have died as of today. The launch of mass vaccine rollout has been a breakthrough, with the administration of approximatively a million doses as of end-May.

“The impact of the pandemic on the economy has been severe. Real GDP growth slowed to 0.4 percent in 2020 from 6.5 percent in 2019, due to lower activity in the extractive industries and a collapse in hospitality and retail services, including the informal sector that especially employs female workers. Inflation spiked to double digit because of food price pressures, before falling to 8.5 percent in April 2021.

Source: norvanreports.com