Ghana’s public debt according to the Bank of Ghana’s (BoG) Summary of Economic and Financial Data, increased from Ghs 291 billion (76.1% of GDP) at end-December 2020 to Ghs 304 billion (70% of GDP) at end-March 2021.
The data on Ghana’s debt as released by the BoG, indicates that the country’s debt for the period between December 2020 and March 2021 – that is, on a quarter-on-quarter basis – increased by Ghs 13 billion.
On a year-on-year (YoY) basis – March 2020 to March 2021 – the country’s debt increased by some Ghs 67.9 billion.
The recorded increment in the country’s debt stock in nominal terms for the first quarter of this year, can be partially attributed to the short-term domestic debt instruments issued by government to finance its short-term needs.
Putting that aside, the surge in the debt stock can be mainly attributed to the recently issued $3 billion Eurobond by government in March.
One would expect that an increment in the country’s debt stock should correspond to into a higher debt-to-GDP ratio in percentage points, however, that was not the case as the county’s debt as a percentage of GDP fell from 76.1 percent to 70.2 percent.
The fall can be attributed to the expansion of Ghana’s economy which begins this year as well as the exclusion of energy sector costs of some Ghs 7.63 billion from the overall debt computation which recently became a national debate given that the IMF added the costs to the country’s debt stock in its May 2021 Article IV Consultation Paper.
Also accounting for the possible fall in the debt stock in percentage terms is the fact that, government has excluded debts raised on the domestic market in April and May this year.
The Monetary Policy Committee (MPC) of the BoG on Monday, May 31, 2021 will be announcing its monetary policy rate for the next two months and it is expected that the Committee will touch on the country’s current debt stock as of May 2021. If Committee does so, then the country’s debt stock as a percentage of GDP will be expected to be higher than the 70.2 percent.
The size of the economy, according to Fitch Solutions, will expand from $62.8 billion in 2020 to $83.2 billion by the end of 2023.
According to Fitch Solutions, research arm of credit rating agency, Fitch Ratings, the expansion of Ghana’s economy is expected to start this year, with the economy growing by $7.2 billion in monetary terms.
Further growing by $5 billion to reach $75.5 billion in 2022.
The more than $20.4 billion increment in the country’s Gross Domestic Product (GDP) according to Fitch Solutions in its April 2021 West Africa Fiscal Monitor Report will translate into a per capita income of $2,206 dollars from the present per capita income of $2,020 by the end of 2021, reaching $2,677 by the end of 2023.
The expansion of the country’s economy Fitch Solutions further notes, will cement Ghana’s position as the eighth (8th) largest economy on the African Continent.
Meanwhile, the International Monetary Fund (IMF) has projected Ghana’s total debt stock to hit 86.6 percent in 2025.
According to the IMF, Ghana’s debt stock is expected to continue on an elevated path reaching 81.5 percent this year, 83.2 percent in 2022, and further to 84.8 percent, 86.0 percent and 86.6 percent in 2023, 2024 and 2025 respectively.
The country’s debt stock will however, reduce by 1.1 percentage points in 2026, ending 2026 at 85.5 percent.
The country’s debt projections stated in the Fund’s April 2021 Fiscal Monitor Report, could possibly push the Ghanaian economy into the debt-distress category, given the fact that the country is already at risk of high debt distress.