Deloitte Ghana has reported that the resumption of debt service commitment by Ghana post the IMF programme presents risks to the country’s target of attaining 55% debt-to-GDP at the end of 2028.
This was contained in its 2024 Mid-Year Budget Review report.
This is despite the country’s external debt restructuring resulting in debt relief of $4.4 billion and debt cancellation of $4.7 billion throughout the IMF Programme, which is expected to slow down the extent of the country’s debt accumulation and therefore the rise in Ghana’s debt to GDP ratio.
“Ghana has targeted a debt-to-GDP ratio of 55% by the end of 2028, however, the resumption of debt service commitment post-IMF presents some risk to this target,” remarked the globally reputed audit firm.
Already, Ghana is scheduled to make between $600m to $800m in debt service payments by the end of this year.
As of the end of June 2024, total public debt stood at GHS 741.95 billion, representing an increase of 22% from the previous year’s GHS 608.4 billion as of December-end 2023.
In the same period, the ratio of gross public debt to GDP decreased marginally from 72.3% as of June 2023 to 70.6% of GDP.
Domestic debt grew by 12.7% from GHS 257.3 billion to GHS 289.9 billion due to the continuous disbursements from creditors.
External debt also increased by 28.7% from GHS 350.9 billion to GHS 451.9 billion as a result of the sharp depreciation of the Ghana cedi.
The improved debt position has resulted mainly from $2.8 billion in debt relief (from bilateral and multilateral creditors) and $4.7 billion in debt cancellation (from Eurobond holders).
To attain the optimal 55% debt-to-GDP ratio by the end of 2028, Deloitte in its report suggested that the Government direct increasing portions of additional loans into productive and self-financing capital expenditure to expand the economy whilst generating inflows to pay down the loans.
“Given that the debt will most likely continue to increase over time, the most feasible option for achieving the optimal debt to GDP ratio is to direct increasing portions of additional loans into productive and self-financing capital expenditure to expand the economy whilst generating inflows to pay down these loans,” the report noted.