Finance Minister, Ken Ofori-Atta

Ghana ended 2019 with a total debt stock of GH¢218 billion, according to Bank of Ghana’s December summary of financial and economic data. 

This was released after the Monetary Policy Committee met this week to review the health of the economy.

The meeting was also to make a decision that is likely to influence the cost of credit in the country as well as some drastic measures to help reduce the impact of the COVID-19 on the economy.

Breakdown of the debt numbers 

The GH¢ 218 billion total debt stock puts the country’s Debt-to-GDP Ratio at 63.0 per cent, the same figure projected by the IMF for the country. 

A breakdown of the debt numbers shows that $20.3 billion of the debt were secured from outside the country, this is about 32.5 per cent of the total value of the economy.  

On the other hand, GH¢105.5 billion was secured locally, this represents, 30.5 per cent of GDP. 

The total cost of the financial sector cleanup was peg at GH¢10.7 billion, about 3.1 per cent of the GDP.

Rate of increase since December 2019   

The new debt numbers mean that since September 2019, the last time that Bank of Ghana released the debt numbers, the total debt stock had gone up by some GH¢9.4 billion. 

However, from December 2018 to December 2019 the debt stock has gone up by some GH¢44.1 billion.  

Reasons for the hike in Debt stock

The increase in the debt stock from September 2019 to December can be attributed to the cedi’s marginal depreciation and recent funds advanced towards the cleanup of the banking and non-banking sectors of the economy. 

The data shows that domestic debt component, from July 2019 to December 2019 went up from GH¢98.3 billion to GH¢105.5 billion.

How much does every Ghanaian owe?

Based on the GH¢218 billion debt, every Ghanaian should owe about GH¢ 7, 266 if the debt is shared among the population size of 30 million. 

Some analysts have even argued that Ghanaians could be paying for this cost in the form of taxes.    

Impact of rising debt stock on the economy

For some, the impact would be on Ghana’s debt servicing bill. According to the 2019 Budget government was planning to set aside GH¢18.6 billion just to pay for the interest of funds borrowed. 

In the 2020 Budget, the Finance Minister Ken Ofori-Atta is projected that interest payment would hit GH¢21.7 billion.