Public debt remains steady at GHS 575bn – BoG data

Ghana’s debt situation remains a significant concern for both the government and investors alike, with the country’s public debt stock remaining unchanged at GHS 575.7 billion at the end of November 2022, representing about 93.5% of Gross Domestic Product (GDP).

The country has taken steps to address the situation, with a Domestic Debt Exchange Programme garnering around 85% participation from institutional investors. However, the external component of Ghana’s public debt reached $29.2 billion (GHS 382.7 billion) in November 2022, equivalent to 62.1% of GDP.

With Ghana having already suspended payments on most of its external debt in December 2022, defaulting as the country struggles to rebalance its economy, the government has been engaging with external creditors to conclude external debt restructuring by the end of March 2023.

One such creditor is China, which holds about $1.7 billion of Ghana’s debt. To this end, Finance Minister Ken Ofori-Atta travelled to China on March 23, 2023, to negotiate with the Chinese government, with a successful meeting resulting in positive assurances on reaching an agreement with the government.

The Ghanaian government’s fiscal deficit to GDP narrowed to 8.1% in December 2022, from 9.8% in November 2022. However, while there has been progress, there is still much work to be done.

The report did not provide data on the financial sector resolution debt and other liabilities, such as the energy sector debt. The government’s debt situation will continue to be monitored closely by investors, with concerns around the country’s ability to service its debt in the long term.

Despite the challenges, Ghana’s economy remains relatively robust, with growth expected to reach 6.1% in 2023, up from 4.1% in 2022. The country’s oil and gas sector is a significant contributor to the economy, with a new production platform expected to come online in 2023, increasing the sector’s output.

Additionally, Ghana’s agricultural sector has shown resilience, with cocoa production remaining strong despite challenges posed by the COVID-19 pandemic.

Overall, while Ghana’s debt situation remains a concern, the government’s efforts to address the issue are encouraging. The success of debt restructuring negotiations with external creditors, such as China, will be crucial in determining the country’s long-term economic outlook. Nonetheless, Ghana’s economy remains relatively strong, with a diverse range of sectors contributing to growth.