The government’s decision to diversify its borrowing sources in 2022 has been commended by accounting firm, Deloitte.

“It has become critical for the Government to consider diversifying its borrowing sources, hence Government’s decision to temporarily suspend access to debt from International Capital Markets (ICMs) and resort to domestic borrowing through syndicated loans from commercial banks is laudable”, it said in its 2022 Budget Review.

However, it wants government to limit its reliance on domestic borrowing which could result in ‘crowding out effect’ by limiting available credit to business and increase the cost of borrowing in the country.

Deloitte is also urging government to negotiate competitive interest rate on facilities in order to reduce the rising interest payment.

Interest payments continue to take significant portion of government expenditure as it is projected to constitute the highest component of 27.6% of the 2022 budgeted expenditure.

With the rising debt to GDP ratio, a downgraded credit rating and increasing inflation in advanced economies, government’s borrowings from the international capital markets are expected to be more expensive in 2022, further increasing the interest expense on loans.

But government has outlined measures to manage its debt going forward.  

They include Medium-Term Debt Management strategy for 2022-2025 which proposes reducing total limits set for concessional and non-concessional external borrowing from $2.5 billion to $2 billion, proposing new instruments to diversify the debt portfolio and increase the debt financing capacity of the domestic market and acceleration of the fiscal consolidation plan to target a positive primary balance in 2022.

Also, the contribution of Covid-19 to increased debt stock has stabilised since the end of September 2021.

Ghana’s public debt stock stood at ¢291.63 billion in December 2020, but has since shot up to ¢341.76 billion as of the end of September 2021.



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