Accra, Ghana, January 27, 2019//-Latest figures released by the Bank of Ghana (BoG) revealed that the government has, within a month added GH¢1.7 billion to the country’s total public debt stock.
This brings the country’s total debt (both domestic and foreign) to GH¢172.9 billion, representing 57.9 percent of GDP as at the end of November 2018, up from GH¢171.2 billion (57.3percent) recorded in October, same year.
Of the total public debt of GH¢172.9 billion, domestic debt of GH¢86.5 constituted 29.0 percent of the debt –to-GDP, while the external debt of GH¢ 86.3billion represented 28.9 percent of the deb-to-GDP.
With the current total public debt stock, it implies that Ghana loses 57.9 percent of its GDP to the ever-growing public debt. GDP is defined as the total market value of all final goods and services produced in a country in a given period, usually a year or quarterly.
Every Ghanaian owes over GH¢5,763
Ghana, with an estimated population of 30 million people, which when divided by the current public debt of GH¢172.9 billion, every Ghanaian would owe over GH¢5,763 to the country’s creditors, both internally and externally, as of November 2018.
Gov’t yet to explain why the debt balloon
The fiscal managers of the economy have so far offered no reasons as to what caused the balloon in the public debt stock.
But some government officials attributed the rise in the debt to the marginal depreciation of the cedi (Ghana currency) over the October-November period.
Also, the government issuing of debt securities which billions of cedis to pay off some struggling banks as part of the recently concluded BoG’s banking sector reforms.
Implications on economy
Public debt accrues over time, when the government spends more money than it collects in taxation, and as a government engages in more deficit spending, the amount of public debt increases. That is the exact sad story of Ghana, according to economists.
Commenting on the development, a renowned economist and Professor at the University of Cape Coast (UCC), John Gatsi told TV 3 late news that the rise in the country’s debt stock could mean that more monies would be channeled into high interest payments to the country’s creditors.
These monies according to him could have been used to undertake development projects to ameliorate the plight of the people. Some could have also been used to capital expenditure projects for the benefit of the country, Prof Gatsi added.
African Eye Report
