World Bank Country Director’s comments on Ghana’s public debt vindicates PFM Tax Africa

The recent comments by the World Bank Country Director, Pierre Laporte, that Ghana’s public debt stock in relation to its Gross Domestic Product may be more than the Bank of Ghana’s quotation of 78.4% vindicates PFM Tax Africa’s earlier argument that Ghana’s economy may be struggling as against comments by policymakers.

PFM Tax Africa, headed by former Finance Minister Seth Terkper had argued that the fiscal numbers in its possession suggest that Ghana’s economy may not be in a good state.

It also stated that the economic fundamentals of the country begun deteriorating before the emergence of COVID-19 pandemic.

This was earlier confirmed by the International Monetary Fund Fiscal Monitor Report which had pegged Ghana’s debt-to-GDP ratio at the end of 2021 at 81%, whilst the fiscal deficit to GDP was about 15%.

The World Bank Country Director, at the One Ghana Movement Lecturer said Ghana’s public debt stock as of now has exceeded the 80% of GDP mark, putting the country in a tighter corner with respect to financing and interest payments.

The country’s total public debt stock stood at about ¢344.5 billion, approximately 78.4% as of November 2021.

“The data as we know is close to 80% of GDP. Probably, now as we speak, it might have exceeded.”

“The fiscal deficit [9.7% in December 2021], unfortunately, with COVID-19 needs to be urgently brought down. Inflation must also be brought down. This is an interesting discussion, and we must acknowledge the situation on the ground”, Mr Laporte said

He further said the country is in a very challenging situation “as some of the panel have acknowledged that. We call it a crisis. We can describe it in many ways”.

“It’s a really serious situation, and at the World Bank, we’ve not hidden the fact. When we discussed with the Minister [Ken Ofori-Ata] and with all the people in finance and the Head of State [President Akufo-Addo]. The situation is very difficult right now; Ghana faces a very tough road ahead to restore macro sustainability”, Mr Laporte added.

Economic challenges persisted before COVID-19

The World Bank Country Director emphasised that macroeconomic challenges persisted even with the emergence of the COVID-19 pandemic.

“Yes, COVID-19 has not helped, but even before COVID-19, there were signs that the situation was getting a little bit challenging”.

“So, the key thing is to be transparent with the people”, he suggested.

“Yes, the figures speak for themselves, but not everybody is as educated as we are. Not everyone understands what the numbers mean, so it is important to talk about it like we are doing”, he noted.

“More important is for us to find solutions for the problem,” he added.