Ghana’s overall debt increased by GH64.7 billion (30.9 percent) in one year to GH273.8 billion (71 percent of GDP) at the end of September 2020, up from GH209.1 billion (62.4 percent of GDP) in September 2019.
Ghana’s capacity to service its debt has deteriorated, according to experts, due to its inability to raise sufficient domestic money to fund its activities.
On December 10, 2020, it was announced that the budgetary allocations for the year 2021 would increase Ghana’s national debt stock even more.
The emergence of COVID in 2020, as well as the economic effects it had on world economies, can also be blamed for the rise in debt.
Ghana’s current debt stock, as of September 2021, sits at GH341.8 million.
Ghana’s overall debt increased by GH64.7 billion (30.9 percent) in one year to GH273.8 billion (71 percent of GDP) at the end of September 2020, up from GH209.1 billion (62.4 percent of GDP) in September 2019.
Domestic debt climbed by GH33.9 billion (33.4 percent) during the period, from GH101.4 billion (29 percent of GDP) to GH135.3 billion (35.1 percent of GDP), representing an increase of GH33.9 billion (33.4 percent) and a share of 49.4 percent, slightly higher than the 48.5 percent share a year ago.
Over the one-year period ending in September 2020, the external debt climbed from GH107.7 billion (30.8 percent of GDP) to GH138.5 billion (35.9% of GDP), reflecting an increase of GH30.8 billion (28.6%) and a share of 50.6 percent. (Ghana Bank, November 2020)
The higher share of external debt over the past year ending September 2020, according to the Bank of Ghana, reflects primarily the Eurobond issuance in February this year, World Bank Development Policy Operations and support for COVID-19 Preparedness and Response Program, IMF Rapid Credit Facility, and African Development Bank support (September 2020).
As the Government strives to address the financing gap generated by the COVID-19 epidemic, the increase in domestic debt reflects mostly a rise in medium-to-long-term debt.
The COVID-19 epidemic has had a significant impact on government budgetary operations in the first nine months of 2020, as well as the resulting fast increase in the public debt.
The fiscal impact of the covid-19 pandemic, according to the government, was estimated at GH9.5 billion (2.5 percent of GDP) in March this year, due to shortfalls in petroleum receipts, import duties, and other tax revenues, as well as the cost of the Emergency Preparedness Response Plan and the Coronavirus Alleviation Program.
According to a revised projection of the pandemic’s fiscal impact, total revenue and grants will fall short of the 2020 budget objective by GH13.4 billion (3.5 percent of GDP), while spending will rise by GH11.8 billion (3.1 percent of GDP).
As a result, the overall fiscal deficit is expected to rise from GH18.9 billion (5.1 percent of GDP) to GH44.1 billion (11.8 percent of GDP), owing to rising health-care costs, social interventions to protect Ghanaians from the negative effects of public policy responses aimed at halting the pandemic’s spread, and spending on business stimulus to keep the economy from entering recession.
This will be a challenging assignment to fulfill, given the expense of staging the 2020 general elections is likely to bulge public spending in the fourth quarter of the year.
Ghana’s debt stock increased by GH55.6 billion in the first nine months of this year, and it is expected to rise much more by the end of 2020, with the government planning to issue a gross sum of GH22.7 billion in the fourth quarter. GH19.7 billion will be used to rollover maturities, with the remaining GH3.0 billion to be used for new issuance to meet financial needs.
With a fiscal deficit aim of 11.4 percent of GDP, more than double the 4.7 percent of GDP deficit forecast in the 2020 budget before the COVID19 epidemic, the government may be obliged to accept bids that exceed the debt issuance calendar’s target.
In addition, on September 30, 2020, the Minister of Finance signed two financial agreements worth €92.9 million with the European Union on behalf of the government to support the Covid-19 response in Ghana, as well as electoral violence prevention and support to enhance security in the country’s northern border regions.
In addition, the World Bank granted an extra credit of $130 million from the IDA for Ghana’s COVID-19 on November 10, 2020.
Project on Emergency Preparedness and Response. This new funding for the health sector is intended to help the government ramp up its efforts to combat the COVID-19 pandemic’s comeback and safely restart the economy.
In addition, on September 30, 2020, the Minister of Finance signed two financial agreements worth €92.9 million with the European Union on behalf of the government to support the Covid-19 response in Ghana, as well as electoral violence prevention and support to enhance security in the country’s northern border regions.
In addition, the World Bank granted an extra credit of $130 million from the IDA for Ghana’s COVID-19 on November 10, 2020.
Project on Emergency Preparedness and Response. This new funding for the health sector is intended to help the government ramp up its efforts to combat the COVID-19 pandemic’s comeback and safely restart the economy.
Source: ghanaweb.com
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