IMF forecasts Ghana’s debt-to-GDP ratio of 84.6% in 2022

The International Monetary Fund (IMF) forecasts a debt-to-gross domestic product (GDP) ratio for Ghana of 84.6% in 2022.

According to its April 2022 Fiscal Monitor report, the country’s total debt was estimated at 81.8% of GDP in 2021, higher than the 80.1% or around ¢351.8 billion quoted by the Bank of Ghana.

The Fund also said the country’s debt-to-GDP ratio would increase from 2022 to 88.4% in 2026, before falling to 87.4% in 2027.

But before that, it will register relatively the same debt-to-GDP ratio of 84% in 2022 and 2023, then rise to 85% and 86% in 2024 and 2025 respectively.

Growing debt can limit public financing and therefore affect capital spending, unless the government acts quickly to shore up revenue, which the IMF describes as a bright future.

The government will also need to step up its expenditure rationalization program to ensure that there are value for money projects, while the leaks within the system are blocked.

The Fund projects that Ghana’s tax revenue to GDP ratio will increase in 2022 to 16.5% from 14.7% in 2021. This will be a big improvement from the rates recorded over the past 10 years.

In 2023 and 2024, however, the country’s tax-to-GDP ratio will fall to 16% and 16.2% respectively.

Ghana’s public debt increased to ¢351 billion in December 2021

Ghana’s outstanding public debt rose to 351.8 billion yen in December 2021 from 344.5 billion yen in November 2021, or about 80.1% of gross domestic product (GDP).

According to figures from the Bank of Ghana, around 730 million new loans were added to the total stock of public debt in December 2021.

According to the figures, the domestic debt rose to ¢181.8 billion in December 2021 from ¢179.4 billion in November 2021. This is equivalent to 41.4 of GDP.

Moreover, the external component of the total public debt increased to $28.3 billion (¢170.0 billion), from $27.9 billion in November 2021. It remained however unchanged between October 2021 and November 2021.

The debt/GDP ratio of external debt, however, is equivalent to 38.7% of GDP.

Sallie R. Loera