Mr. Ken Ofori-Atta (Minister of Finance, Republic of Ghana)

The country’s public debt stock has reached ¢159.4 billion as at August 30, this year according to the Central Bank’s September summary of Economic and Financial data.

The data also shows that the stock of debts went up by ¢5.1 billion from May this year to August.

From the data, the domestic debt accounted for ¢73.8 billion cedis representing 30.6 percent of the total value of the economy. Also, $18.2 billion of the total debt were loans taken from outside the country.

This translates into ¢85.5 billion, when denominated it in cedis and represents 35.4 percent of Gross Domestic Product (GDP). The ¢159.4 billion debts translate into 65 percent of Ghana’s GDP.

Some economists have argued that this may not be that bad because the country may not have crossed the dreaded 70 percent mark which could result in Ghana being classified as a debt distress country.

This could increase the cost of the country’s loans that are being serviced and the ones that government intends to take. Some have also argued that becuase the economy has expanded over the last months, it means that the country has gotten a lot of assets to payoff these debts on time.

According to data put out by the Ghana Statistical Service in April, the value of the country’s economy at about ¢215 billion.

Possible reasons for debt stock increase

There are no official reasons for now as to what caused the debt numbers to increase by over 5 billion cedis in just three months to ¢159.4 billion cedis.

However, Joy Business understand some fresh borrowing in Eurobonds, treasury bills issuance and cedi’s depreciation might have led to a spike in the debt numbers over the past three months.

Sources also say recent ¢2.2 billion bond issued to deal with the UT and Capital Banks collapse could have also contributed to the increase.

Some of the borrowings, they say was also used to pay off expensive debts that were maturing.

Since the beginning of the year, the debt stock has gone by almost ¢14 billion cedis, which could be linked to the $2 billion Eurobond raised this year.

Borrowings for Half Year

According to government’s issuance calendar for the first half of this year, it borrowed about ¢22.4 billion through bonds and Treasury bills.

However, only ¢4.6 billion can be classified as fresh borrowings which were used to meet the government’s financing needs. The remaining ¢17.8 billion was used to finance debts that were maturing.

The calendar showed that it took ¢11.3 billion in the second half of this year and ¢11.1 billion in the second quarter of this year.

Source: Myjoyonline.com