Ghana’s external debt has increased by GHS30.2 billion between July 2019 and July 2020.
The total external stock of public debt has increased from GHS 107.8 billion in July 2019 to GHS138.0 billion at end of July this year. This resulted in a year-on-year growth of 28 percent as at the end of July 2020.
This is according to recent macroeconomic and financial data released by the central bank of Ghana on September 25, 2020.
The Bank of Ghana (BOG) attributed the rise in the debt stock to low revenue and increasing expenditures over and above the target in the first seven months of the year.
The current stock of external debt accounted for 35.8 percent of GDP as compared to 30.9 percent in July 2019.
0n a month-on-month basis, eternal debt increased by GHS1.3 billion, from GHS136.7billion in June 2020 to GHS138.0 billion as at July the same year. This represents a 0.95 percentage point increment over the previous month.
Figure 1 External and Domestic Debts as percentage of GDP
Source: Bank of Ghana
According to the current data released by the Bank of Ghana, domestic debt component of the total debt stock has also increased from GH¢122.1 billion (31.7% of GDP) in June to GHS125.1billion (32.5% of GDP) at the end of July.
This means that domestic debt has increased by GHS3 billion between June and July 2020. A monthly growth of 2.46 percent.
The domestic debt as at the end of July 2019 stood at GHS98.3 billion representing 28.1 percent of GDP. This implies that on a year-on-year basis, domestic debt has increased by GHS 26.8 billion, culminating into a growth rate of 27.3 percent.
The effect of this development has been an increase in the total stock of public debt from GHS 258.8 billion in June 2020 to GHS263.1 billion at end of July the same year. This puts the country’s debt stock at 68.3 percent of GDP having increased from 67.2 percent in June.
The BOG said in the September MPC report that “the primary balance also recorded a deficit of 3.7 percent of GDP, above the planned target of 3.4 percent of GDP. Over the review period, total revenue and grants amounted to GH¢27.7 billion compared with the target of GH¢26.8 billion.
“Total expenditures and arrears clearance amounted to GH¢56.2 billion, above the target of GH¢53.3 billion”.
These developments, according BOG, “impacted the stock of public debt which rose to 68.3 percent of GDP (GH¢263 billion) at the end of July 2020, compared with 62.4 percent of GDP (GH¢218.2 billion) at the end of December 2019”.
The year-on-year analyses shows an increment of 28 percent over the past one year. This is because in July 2019, the total stock of public debt was GH206.1 billion as compared to the current figure which stands at GHS263.1 billion in July 2020.
The total stock of public debt has for the past seven months of the year been on the rise. In January, the stock of public debt stood at GHS219.6 billion representing 57.0 percent of GDP.
This however, increased steadily to end the first quarter at 61.4 percent, with a nominal value of GHS236.7billion. As at the end of the second quarter in June 2020, public debt galloped to GHS 258.8 billion which accounts for 67.2 percent of the county’s GDP.
With regards to trade, BOG added that, “prices of the key export commodities continue to trade mixed in the year to August 2020. Crude oil prices have declined by 30.9 percent from the beginning of year to August 2020 primarily due to low demand as a result of the COVID-19 pandemic”.
