The World Bank Country Director Pierre Frank LaPorte has stated that Ghana’s rising debt levels places it at pre-HIPC levels and must be checked to prevent the figure from escalating further.
According to him, the government’s increased borrowing to pay outstanding debts and not to be re-invested is risky for an emerging economy like Ghana which poses dire consequences.
The Bank of Ghana’s latest Summary of Economic and Financial report, revealed that the public debt as at May this year stood at about GHS200 million – translating into about US$38.8 billion.
Out of this amount, external debt accounts for US$20.5 billion.
Speaking at the World Bank’s Economic Marathon on Thursday afternoon, expressed worry about the situation.
“Actually, the World Bank is quite concerned about the recent trend in debt. We see across Africa debt is rising and we may be returning to HIPC levels of debt, where debt was unsustainable. All the gains from the HIPC initiative are being eroded.
Borrowing is necessary for development, but we have to consider sustainability. Africa has to be careful and Ghana is no exception. We have to consider domestic and external debt because when the economy is in balance and foreign currency is not an issue.
A country can repay its external debt but there has to be a balance so not too much of your foreign exchange reserves are being used to service debt,” he said.