The government has been urged to be circumspect when it comes to borrowing this year, 2022.
This is according to the Director of the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana, Professor Peter Quartey.
A close look at the Summary of Macroeconomic and Financial Data from the Bank of Ghana shows that Ghana’s public debt stock as of September 2021, stood at GH¢ 341.8 billion and was equivalent to 77.8% of Ghana’s Gross Domestic Product (GDP). The domestic debt stock stood at GH¢ 178.1 billion, while the country’s external debt stood at GH¢ 163.7 billion.
The data from the Central Bank also shows that in the first 9 months of 2021 about GH¢ 50 billion of debt was piled into the debt from the previous year.
In the 2022 budget, the government attributed the high debt rate to a number of things including but not limited to financial sector bailout costs, energy sector IPPs payments and the impact of the COVID-19 pandemic.
Speaking to Citi Business News on sustainable debt management in 2022 and beyond, Prof. Quartey urged the government to stick to its planned debt management strategy to reduce the debt-to-GDP ratio in the medium to long term.
“Government will certainly have to borrow. How much they borrow will depend on how much revenue they are able to raise. I however don’t expect that at our current debt-to-GDP ratio which is very high, the government would borrow like it used to in the past. It certainly has to be circumspect.”
“If it wants to borrow, then it will have to factor that into where we are and where we plan to get to. Last year’s budget saw some projections that were trying to get the debt-to-GDP ratio down to 65% by 2024. I hope and believe that government will follow that trajectory to enable the country to get to a sustainable debt threshold in the medium to long-term,” he added.