Ghana’s Debt-to-GDP ratio has dropped to 57.2% according to the Monetary Policy Committee of the Bank of Ghana.
In the 2016 Annual Progress report, Ghana’s Total Debt to GDP ratio stood at 73.1% at the end of December, 2017 with year on year debt accumulation rate of 36% in the erstwhile administration.
The situation resulted in an increasing interest burden, with interest payments alone consuming 45% of tax revenue and 6.8% of GDP in 2016.
The Akufo-Addo government upon assuming office realized the negative consequences this high rate of debt accumulation has on the economy which includes narrowing the fiscal space for the government to operate.
That is, with high debt to GDP ratio, the country is forced to use more resources to service old debts instead of investing in the economy.
With the inherited debt strangling the economy, there was the need to implement prudent fiscal measures to reduce the debt stock of the economy. One of the measures was to accelerate the rate economic growth whilst slowing the rate of debt accumulation.
Specific measures implemented as outlined by the 2017 budget statement include reduction in fiscal deficit and debt re-profiling (involves borrowing at less expensive rates to replace more expensive debt at longer tenor). As a result the debt to GDP ratio declined from 73.1% at the end of December 2016 to 68.6% at the end of September 2017. The interest burden declined from 45% of tax revenue to 43.9% in September 2017. (2018 BUDGET FIGURES)
In this 2018 fiscal year, the Government again didn’t renege on its promise of debt sustainability. The approved 2017-19 Medium Term Debt Sustainability Strategy was strictly implemented. The strategy supported fiscal consolidation and tight monetary policy that minimizes cost and addresses portfolio risk. Vibrant domestic capital market that support domestic financing of budget was government’s priority.
The recent recognition of increased economic activity has contributed to a further reduction from 68.6% to 57.2%.
Excluding the costs of bailing out distressed banks, the debt to GDP was 53.9 % of the rebased GDP. This implies that, the debt Sustainability Strategy implemented is expectantly yielding the required results and has drastically reduced the rate of debt accumulation from 36% to 19.8%. This gives hope that with persistent fiscal discipline as practiced by the administration, debt to gdps ratio will further decrease and therefore freeing up more fiscal space for the government to undertake developmental projects.
Source: Peacefmonline.com
Disclaimer: Opinions expressed here are those of the writers and do not reflect those of Peacefmonline.com. Peacefmonline.com accepts no responsibility legal or otherwise for their accuracy of content. Please report any inappropriate content to us, and we will evaluate it as a matter of priority. |
Debt to GDP of other countries by IMF in 2017 Belgium - 103% Brazil - 83% Egypt- 103% France - 96.9% India - 70% Italy - 131% Japan - 236.38% Portugal - 125.6% Singapore - 110.86% Spain - 98.36% Ukraine - 75.6% UK - 87% USA - 107% so Ghana is doing well.
Yaw Ampong, don't fall for this propaganda write-up. Are you aware that Ghana's GDP was rebased recently??? Any serious comparison would have compared the debt to GDP based on the rebased GDP in 2016 and 2017. As it stands now, they are only comparing the debt to GDP of the old GDP estimates in previous years with the current rebased GDP. The central issue is that our total debt is increasing excessively and it should be checked. For our small economy, in less than 2 years, we've added almost 50 billion cedis to our public debt. This is serious.
Its true our debt portfolio has increased from GHc122 billion in 2016 (73.1% debt to GDP ratio) to Ghc170billion (57.2% debt to GDP ratio)in the same situation, the value of the country's total assets have also increased. In simple understanding, assuming in 2016 our total assets was valued GHc100.00, our total debts was GHc73.10 Presently assuming our total is at the same value of GHc100.00, our total debts is now GHc57.20.
Our debt has increased from 122 billion from the end of 2016 to over 170 billion by September, 2018, meaning that in just less than 19 months in government, the NPP increased public debt by about 50 billion cedis, the worst record in the history of this country. Because our economy has been rebased, our GDP has been expanded and consequently the debt to GDP seems low but in reality government is increasing the debt stock at a very alarming level which must be checked
A competent Gov't at work .