Ghana is continuing to experience increasing public debt stock despite efforts to control it through both domestic and external debt exchange programmes.
The latest data published by the Bank of Ghana confirms that the economy’s public debt stock as well as the debt to GDP ratio have been on an increasing trajectory since the beginning of the year 2024 raising concerns about sustainability.
The Summary of Economic and Financial Data released by the Central Bank reveals that from January to July 2024, Ghana’s total public debt climbed steadily from GH¢633.3 billion in January to GH¢ 761.1 billion by July.
This surge is also accompanied by an escalating debt-to-GDP ratio, which increased from 62.3% in January to 75.7% by July, signaling heightened concerns over the sustainability of the debt levels.
The domestic component of the total debt stock also grew sharply from GH¢265.6 billion in January 2024 to GH¢290.0 billion by July 2024. The domestic debt-to-GDP ratio also saw a noticeable rise, moving from 26.0% in January to 28.4% in July, reflecting increased reliance on local borrowing to meet fiscal obligations at the time the country has been locked out of the international capital market due to default in honouring maturing obligations.
The steep rise corroborates government’s borrowing from the domestic market which has been crucial to the running of the country although it has been consistently failing to meet its weekly borrowing targets on the treasury bills market.
External debt also expanded steadily, reaching GH¢ 470.1 billion by July 2024, up from GH¢ 367.7 billion at the start of the year. The external debt-to-GDP ratio hit 47.6% in July, up from 36.0% in January.
In dollar terms, the debt still went up from $50.9 billion in June to $51.1 billion in July.
The continuous rise in the country’s public debt raises concerns about the impact of the debt restructuring programme which culminated in both domestic and external debt exchange programmes with many local and external investors receiving a haircut.
With the public debt stock reaching 75.7% of GDP, the concerns surrounding Ghana’s debt sustainability are becoming more pressing underscoring the need for a more drastic approach to managing the country’s debt. Experts say low levels of debt are crucial to creating fiscal space for the government to fund capital and developmental projects that benefit the citizens.
