Dr. Abdul Nashir Issahaku
Dr. Abdul Nashiru Issahaku, Governor of the Bank of Ghana (BoG), has stated that Ghana is not in debt distress despite a public debt stock of GH¢105.1 billion as at the end of May 2016.
According to him, the country has the ability to meet its debt obligations without debt relief.
Ghana’s total public debt stock rose from GH¢104.5 billion at the end of April 2016, representing 66.3 percent of GDP to GH¢105.1 billion at the end of May 2016, representing 66.4 percent of Gross Domestic Product (GDP).
Debt incurred internally was GH¢43.2 billion, representing 27.3 percent of GDP, while the external debt stock stood at GH¢61.9billion, representing 39.1 percent of GDP.
Since January, this year, the country’s debt has been increasing, crossing GH¢1 billion month by month.
In January, the debt was GH¢101.1 billion and increased to GH¢102.3 billion in February while in March it recorded GH¢103.1 billion.
The NDC administration inherited a debt stock of GH¢9 billion in 2008 but increased it to GH¢105.1 billion.
However, the Governor said the nation’s debt was serviceable, stating “Ghana is not in debt distress and so we are not asking for debt forgiveness, we are seamlessly replacing maturing short-term debts with longer dated debt instruments.
“It is a gradual process but we are hopeful that once investors’ expectations are fully anchored on the back of improving macroeconomic environment, the longer dated instruments will become the preferred option for investors.”
He said the country was taking steps to lengthen the maturity profile of its debt.
Dr. Issahaku also added that the debt-to-GDP ratio might change due to a change in debt level, nominal GDP or both, adding that currently the country has the ability to meet its debt obligations without requiring debt relief.
He explained that one of the critical determinants of debt sustainability was the domestic primary balance, adding that a positive domestic primary balance underpinned by a growing economy is an indication that a country’s debt is sustainable.
By Cephas Larbi