• Ghana has been cautioned against its rising domestic and external debt stock
• The public stock has reached GH¢332 billion as at May 2021, according to the Bank of Ghana
• A figure which represents 76.6% of Gross Domestic Product
Ghana is likely to pay a heavy price if its domestic and external debt impacts the larger economy resulting in a huge debt burden, the World Bank Country Director has warned.
Latest figures by the Bank of Ghana as at May 2021 indicates that Ghana’s public debt stock reached GH¢332 billion after it initially went up by about GH¢27.8 billion between April 2021 and May 2021. A figure which represents 76.6% of Gross Domestic Product.
But Pierre Laporte in an interaction with Accra-based Class FM pointed that Ghana currently is threading on a dangerous path as the nation is now classified as highly debt distress.
Despite the warning, the World Bank Country Director on the hand believes that an expansion or high growth rate of Ghana’s economy can help reduce the increasing debt levels to an extent.
“What the latest figures show is that Ghana’s debt-to-Gross Domestic Product ratio is close to 80%, about 78%. It should be noted that before COVID-19, it was a bit lower than that, but was in the high 60’s; so COVID-19 has contributed to the debt of Ghana like every country in the world. What we’re saying is that Ghana is at high risk of debt distress,” Laporte explained.
He continued, “What this means is that Ghana is more at risk of going to default or distress, if certain things happen. For instance, Ghana depends on oil so if oil prices were to crash, this will put Ghana at a more uncomfortable position vis-à-vis payment of its debt.”.
“If gold prices or commodities Ghana export go down, if for whatever reason domestic revenue, which are already very low, go so low because of a shock, then Ghana will have trouble fully servicing its debt,” Laporte added.
