Ghana’s total debt stock now GH¢92.1bn

• Posted on November 16, 2015
• by Nana Kwesi Coomson
• Comment

The country’s provisional debt stock as at September 2015 stood at GH¢92,161.84 million ($24,285.07 million) down from GH¢94.5 billion recorded in July, this year, Seth Terkper, Finance Minister told Parliament on Friday.

The debt stock comprised an external debt factor of GH¢54,488.26 million ($14,357.91million) and a domestic aspect of GH¢37,673.58 million ($9,927.16 million).

Ghana’s total public debt stock was 69.12 percent of GDP as at the end of September 2015 from 70.15 percent of GDP in December, 2014.

The International Monetary Fund (IMF) mentioned that Ghana has crossed the 70 percent debt-to-GDP threshold.

The reduction in the debt stock was mainly on account of a slight appreciation of the local currency.

A dollar was bought at GH¢3.79 and sold at GH¢3.7938 on the local market as at Friday.

Overall Budget deficit for 2016

The Finance Minister said based on the revenue and expenditure estimates, the 2016 budget would result in an overall budget deficit of GH¢8,407.7 million, equivalent to 5.3 percent of GDP, adding that the financing of the deficit would be from both domestic and foreign sources.

“Net Domestic Financing is estimated at GH¢5,441.2 million, equivalent to 3.4 percent of GDP and financing from foreign sources are estimated at GH¢3,398.9 million, equivalent to 2.1 percent of GDP. An amount of GH¢432.4 million, equivalent to 0.3 percent of GDP, is estimated to be saved in the Ghana Petroleum Funds, the Sinking Fund and the Contingency Fund.”

Expenditure

Total expenditure, including provision made for the clearance of arrears and outstanding commitments in 2016, is estimated at GH¢46,445.7 million, equivalent to 29.3 percent of GDP.

The estimated expenditure for the year represents 16.6 percent increase over the projected outturn for 2015. Of this amount, GH¢2,940.6 million, equivalent to 1.9 percent of GDP and 6.8 percent of total expenditure, will be used for the clearance of arrears and outstanding commitments.

Mr Terkper stated that compensation of employees which comprises wages and salaries, allowances, pensions, gratuities and social security contributions by Government on behalf of its employees is estimated at GH¢14,023.9 million, representing 8.9 percent of GDP.

Of this amount, GH¢11,722.8 million (7.4 percent of GDP) is estimated for the payment of wages, salaries and allowances, while GH¢788.9 million, GH¢222.7 million and GH¢1,289.5 million is estimated for pensions, gratuities and social security respectively. Expenditure on goods and services is estimated at GH¢2,536.8 million, representing 1.6 percent of GDP.

“Total interest payment is estimated at GH¢10,490.6.0 million, equivalent to 6.6 percent of GDP and 24.1 percent of total expenditure. Of this amount, GH¢2,173.3 million will be expended on external interest, while GH¢8,317.2 million will be for domestic interest payments.”

Debt management strategy

According to him, a debt sustainability analysis conducted this year revealed a high risk of debt distress as a result of increased coverage to include SOEs debt without recognizing their assets.

He said the Ministry would continue the implementation of fiscal consolidation measures combined with a more ambitious medium-term adjustment to reduce the risk of further worsening debt and debt-service indicators.

“The Ministry will update and publish the Debt Sustainability Analysis (DSA) report and revise the Medium Term Debt Strategy (MTDS) document in 2016 to guide future borrowing.

“Recommendations from these reports will also serve as useful inputs into the budget statement and economic policy of government. For the implementation of the above programmes and activities, an amount of GH¢272,417,782.00 has been allocated. Out of this, GH¢206,626,521.00 would come from government while GH¢14,775,826.00 would be contributed from the Internally Generated Fund (IGF) and GH¢51,015,436.00 from development partners.”

By Samuel Boadi