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Ghana's total outstanding debt, expressed as a percentage of its gross domestic product, is expected to reach 62 per cent by the end of 2019.
This is the latest report of the IMF's financial review published in Washington DC at meetings held this spring.
The report reviewed the economic data of 189 countries based on data collected by their staff during their visits and what governments have also published in terms of expenditures and revenues, as they appear in their budgets.
Ghana's total borrowing and IMF projection
Ghana's debt-to-GDP ratio is forecast to increase by 4% in one year. This could be one of the weakest growths in the ratio for a year lately.
This could mean that the government may not be too much into debt in 2019 or that the economy will develop further to absorb the nominal increase in the number of people in debt.
According to government data released by the Bank of Ghana last month, the authorities showed that last year, the debt-to-GDP ratio was 58%, which corresponds to a par value of 173 billion ¢.
However, some have argued that the government has decided to spend about $ 10 billion "in rescue", which has fueled the huge increase in the debt-to-GDP ratio for 2018. A careful review of Central Bank data also showed that the total stock of debt rose from 142 142.6 billion in December 2017 to ,2 173.2 billion in December 2019, a jump of 21% last year.
Some might say that it could support the government's claim that its debt must redefine its work strategy or call it a debt management strategy.
However, Cathey Pattillo, deputy director of the IMF's budget affairs, told George Wiafe of JOYBUSINESS in Washington during the current spring meetings that the government needed to do more, even though he had attended one of the the weakest growths in debt. relative to GDP.
She added that the government should implement policy measures that would help improve revenue mobilization to finance its growing debts.
The government and the stock of debt
The government, for its part, has argued that its debt profile of "extending the yield curve" and using long-term bonds at a relatively cheaper rate to finance short-term, high-cost debt would go a long way towards reducing nominal debts. Numbers.
He also mentioned some policy measures taken to promote the development of the economy, such as its "One District, One Factory" initiative, which would contribute to the country's industrialization and export revival.
According to Finance Minister Ken Ofori Atta, the government is also working to ensure that these new debts are channeled to a profitable infrastructure project.
In the 2019 budget, the Minister of Finance again noted that; The strategy will focus on a combination of appropriate financing to "support fiscal consolidation without compromising macroeconomic stability".
The minister also noted that the strategy also envisioned the publication of medium-term national instruments to help reduce the costs badociated with cleaning up the financial sector.
Consequences of a high debt-to-GDP ratio for Ghana
In general, investors use public debt as a percentage of GDP to measure a country's ability to make future payments on its debt, which affects the country's borrowing costs and the costs of debt. government bond yields.
For some, a high debt-to-GDP ratio could encourage investors to charge high interest rates or yields whenever the government contracts a loan. Indeed, our debts are at levels equivalent to the value of Ghana's economy, estimated at about $ 270 billion.
According to the 2018 budget, the government plans to reserve about 18.6 billion cedis as interest payments on loans. Of this amount, interest payments on the domestic market will represent approximately 77.8% and an amount of 14,504.9 million GH ¢.
— Myjoyonline
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