ECONOMY IN DEBT DISTRESS; IMF Says Ghana’s Public Debt To Exceed GH¢300 Bn Before End Of 2021

The latest projections by the International Monetary Fund (IMF) puts Ghana’s economy in a high debt distress group.

This is because the International Monetary Fund has projected that Ghana’s public debt stock will hit 81.5% of Gross Domestic Product by the end of 2021.

The projection was contained in the Funds April 2021 Fiscal Monitor for low-income developing countries in sub-Saharan Africa.

The latest projection means that Ghana’s public debt will move above a whopping GH¢300 billion before the end of 2021.

For the 2022 fiscal year, the IMF projects that Ghana’s debt to GDP ratio will increase to 83.2%. This is further expected to surge to 84.8%, 86.0% and 86.6% in 2023, 2024 and 2025 respectively.

The IMF however pointed that in 2026, Ghana’s debt to GDP ratio will only drop marginally to 85.5%.

This projections by the IMF places Ghana’s economy in a high debt distress group. This is because most of the country’s revenue will be used to finance service debt.

Some economists and analysts have cautioned that the increasing debt stock poses a high risk of default which could place the country in a tight fiscal position.

The Bank of Ghana earlier revealed that Ghana’s overall public debt stock in December 2020 reached an unprecedented high of GH¢291.6 billion. This was about 76.1% of the GDP ratio.

External debt for the country on the other hand, according to the central bank reached GH¢141.8 billion which was nearly US$24.7 billion and also equivalent to 37.0% of GDP ratio.