Economists have downplayed any significant increase in Ghana’s total debt stock by the end of 2016.
According to them, this would largely be possible should some economic factors remain constant.
For instance, the CEO of the Institute of Certified Economists Ghana, Daniel Amarteye Anim explained that the repayment of some maturing debts and a stable currency should bring down the country’s debt levels.
“Another reason for the increased debts is the interest payments due to the exchange rate regime which has been relatively stable for some time now. If the situation remains the same, then we could anticipate a minimal increase,” he stated.
He added, “On the contrary should we have the exchange market distorted, then we should expect a high increase in the debt.”
The latest economic and financial data by the Bank of Ghana shows that Ghana’s total debt has reached 112.4 billion cedis as at September 2016.
The figure represents 67.4 percent of Gross Domestic Product (GDP).
Daniel Amarteye Anim however cautioned that an unregulated borrowing by the government will put the country’s debt figures at critical thresholds.
“Government’s appetite for debts is increasing in recent times including the bonds issued on the local market recently. We anticipate that government will not resort to any further borrowing till the end of year. But should it do so, the result will be an increase in the debt.”
External sector performance
The country’s performance on the external sector still raises concern as imports still continue to rise and affecting the balance of payments.
Merchandise exports (gold, cocoa, oil) increased from 2.54 billion dollars in the 2016 first quarter to 7.94 billion dollars by the end of the third quarter.
Also, merchandise imports (oil and non-oil imports) increased from 3.29 billion dollars in the 2016 first quarter to 9.75 billion dollars.
The current account component of Ghana’s balance of payments reached (-1344.6 million dollars) at the end of the third quarter of this year from (-593.4 million dollars) recorded in the first quarter.
Meanwhile the capital account component increased from 64.2 to 150.2 million dollars between the first and second quarters of 2016.
Debt to cross 70% mark?
Economist Dr. Eric Osei Assibey has cautioned that Ghana’s debt to GDP ratio could hit the 70 percent threshold if the base rate for calculating the figure, is adjusted to reflect current growth targets.
“The projection was about 4.9 percent based on the revised budget. If that is what was used to obtain the 65.9 percent and now the IMF has revised the country’s growth target to 3.3 percent thereby reducing the base. Calculating the debt levels with the relatively lower growth rate will result in a higher figure,” he warned.
Crossing the 70 percent mark is also likely to affect Ghana’s international credit rating.
By: Pius Amihere Eduku/citibusinessnews.com/Ghana