A summary of economic and financial data published by the Bank of Ghana puts the country’s total public debt at GH₵198 billion as at the end of March 2019.
This means that GH₵24.8 billion was added to the public debt in the first three months of 2019.
While the nominal debt figure continues to rise, when measured as a percentage of Gross Domestic Product (GDP), the debt is 57.5% of GDP.
$3 billion Eurobond
The debt accumulation in 2019 includes proceeds of the $3 billion Eurobond the government had issued in March.
The growing public debt feeds into the rising interest payments by Ghana on its borrowings.
GH₵21.1 billion for interest payments alone in 2018
Last year, of the GH₵37.8 billion raised in tax revenues, GH₵21.1 billion was used to service interest payments alone.
GH₵51bn borrowed from March 2018 to March 2019
From March 2018 to March 2019, the public debt stock has gone up by GH₵51 billion.
GH₵105 billion external debt
The BoG data showed that out of the GH₵198 billion total debt stock, GH₵106 billion was borrowed from outside the country, constituting the external debt.
GH₵92.8bn domestic debt
However, funds that were borrowed locally, or domestic debt, was GH₵92.8 billion, representing 30.5% of Ghana’s GDP.
Causes of rising public debt stick
The increase in the debt stock in the first quarter can be attributed to the cedis’ sharp depreciation, recent $3 billion Eurobond, and what sources close to government describe as exchange losses.
55% of tax revenue service interests on loans alone
Ghana is spending close to 55% of tax revenue to service interests on loans alone, Finance Minister Ken Ofori-Atta revealed recently.
GH₵23bn to be borrowed in first half of 2019
Based on government’s borrowing calendar for the first half of 2019, it is expected to ‘borrow’ some GH₵23 billion.
Finance ministry, however, explained that these are costs associated with rolling over these government papers.
GH₵1.6bn fresh cash
The ministry maintained that it has rather just borrowed GH₵1.6 billion, which can be described as fresh cash, in terms of the first half of the borrowings.
Can the economy expand to accommodate the debts?
In case the economy does not expand to accommodate these rising debts, it could impact negatively on the country’s Debt-to-GDP Ratio, which currently stands at 57.5%.
Domestic revenue collection has seen a significant rise from 11% (GH₵24,283.5 million) of GDP in 2016 to 13% in 2019 (GH₵45,270.2).
Possible impact on credit ratings
Some analysts would be worried about how the rating agencies would interpret these numbers and the possible impact on Ghana in terms of the cost of credit.
Source: The Finder