Ghana’s public debt stock jumped from GH¢274.1 billion in September 2020 to GH¢286.9 billion in November 2020, according to the latest Bank of Ghana’s Summary of Economic and Financial Data.
This is equivalent to US$50.2 billion and represents 74.4 percent of Gross Domestic Product (total value of goods and services produced in an economy within a period).
According to the data, between October and November, the nation added GH¢12.8 billion to its total public debt stock.
This was largely from covid-19 expenditure in a form of stimulus packages to households and businesses.
Though the rising debt is a worry, it was largely triggered by the coronavirus pandemic which hit the global economy, and therefore the nation may get some relief in the repayment of some loans, particularly bilateral and multilateral loans.
Many countries including some advanced economies had no option but to borrow from the International Monetary Fund and World Bank to stabliise their economies.
According to the data, the external component of the debt stood at GH¢139.6 billion ($24.4 billion), about 36.2% of GDP.
The domestic component was however estimated at GH¢147.3 billion, about 38.2% of GDP.
On the other hand, the financial sector resolution bond still remained unchanged at GH¢15.4 billion, about 4.0% of GDP.
IMF projects 76.7% debt-to-GDP ratio
The International Monetary Fund had forecast a 76.7% of debt-to-GDP ratio for the country in 2020.
It however said in its Sub Saharan Africa Regional Economic Outlook report that the debt-to-GDP ratio will however drop slightly to 74.7 percent of GDP in 2021.
The Bretton Wood institution said the rising debt however possess a threat to both the fiscal and monetary economy, particularly revenue mobilization, exchange rate and inflation.
Ghana, others will not default in debt repayment – Fitch
Rating agency, Fitch, in December said African countries including Ghana that have credit ratings of B and stable outlook will not default in repayment of their loans despite rising debt levels.
Addressing investors on the outlook of Sub Saharan African Sovereigns and Debt Markets, Head of Middle East & Africa Sovereign Ratings, Jan Friederich, said the COVID-19 pandemic has brought some elements of risks to Ghana and other Sub Saharan African nations but these nations are capable of repaying their debt.
“Most of the other Sub-Saharan African countries [Ivory Coast, Ghana and Nigeria] are rated at B which means that there is a material risk of default but limited marginal safety remains. So, we are simply not expecting default for this countries. But we need to emphasize that of course the crisis have means that risk levels are really exceptional, he emphasized.