Domestic interest payments for the first quarter of this year accounted for 80.9% of the total interest payments, data from the Bank of Ghana has revealed.

This is a year-on-year growth of 27.5%.

External interest payments however accounted for the remaining 19.1%, a year-on-year growth of 37.5%.

Government however spent ¢8.2 billion to settle both domestic and external debt.

The increase in domestic interest payment indicates government quest to reduce external borrowing. However, that could also crowd out domestic financing as banks may be force to invest more in government securities which are risk free.

The stock of domestic debt at the end of quarter one 2021 was ¢164.530 billion, indicating an increase of ¢13.820 billion compared to the fourth quarter of 2020.

The growth in the domestic debt stock reflected increases in the short- and medium-term bonds and stocks by GH¢3.805 billion and GH¢9.917 billion, respectively, with the long-term instruments increasing marginally by GH¢96.4 million.

Overall, the short-term debt grew by 22.6%, reflecting increases of GH¢846.8 million in the 91-day Treasury bill, GH¢1.355 billion in the 182-day bills and GH¢1.603 billion in the 364-day Treasury bills. The increase in the medium-term debt at the end of quarter one 2021 was on account of increases in all components with the exception of the 3-year US dollar domestic bond and 3-year Stock held by SSNIT.

The largest component contributor to the medium-term debt during the review period was 6-year Government of Ghana bond which increased by 106.6% (GH¢3.058 billion).

The increase in the long-term debt was however due to a significant rise of GH¢200 million in the 20-year Government of Ghana Bond. This was, however, offset by a decrease of GH¢103.6 million in the 15-year Government of Ghana Bond.

Holdings of domestic debt

Banks held 29.4% of government of Ghana debt to the tune ofGH¢48.316 billion in the first quarter of this year.

The Bank of Ghana followed suit with holdings GH¢34.820 billion, representing 21.2% of the total domestic debt holdings.

SSNIT held GH¢475.4 million (0.3%), Insurance companies GH¢914.0 million (0.6%), whilst “Other holders” made up of Rural Banks, Firms and Institutions and Individuals held GH¢48.034 billion (29.2%).