Minority leader in Parliament, Haruna Iddrisu, has raised red flags on the growing public debt, warning there would be a need to consider a debt ceiling act to limit government borrowing.
According to him, a national debt of GH¢335 billion, which is about 76% of GDP as of July 2021 and still growing should be a matter of concern.
He warned that the excessive borrowing by the New Patriotic Party (NPP) administration led by President Nana Akufo-Addo may jeopardize a future government’s ability to undertake any activity if the borrowed funds are used on consumption.
The Minority leader raised the concern in his opening remarks last Tuesday when Parliament resumed business for the third meeting of the first session.
“The excessive borrowing that we are witnessing at GH¢335 billion, 76% of GDP as of July and still growing and in addition, we are getting many of our assets collateralized. What happens to the future must be of concern to us,” he warned.
New data released by the Bank of Ghana shows that Ghana’s total public debt, which ended the first quarter of 2021 at GH¢ 304.6 billion, increased by almost GH¢ 30 billion in April and May.
This saw Ghana’s total public debt as of the end of May 2021 rising to GH¢ 332.4.
The new debt figure brings Ghana’s debt to Gross Domestic Product (GDP) ratio to 76.6% as of the end of May.
This is the highest recorded so far in the past year, slightly higher than the debt to GDP ratio of 76.1% recorded at the end of 2020.
The debt numbers show that the component of the debt secured outside the country after remaining relatively stable in the first quarter rose significantly by about GH¢20 billion from GH¢141 billion at the end of March 2021 to GH¢161.5 billion at the end of May this year.
The external debt component as of the end of May 2021 made up 37.2% of the total value of the economy, which is projected to be about GH¢434 billion for 2021.
On the other hand, the component of the debt secured locally increased steadily in the first 5 months of 2021.
When compared with the figure recorded at the end of the first quarter, Ghana’s domestic debt rose by about GH¢ 7 billion, bringing total domestic debt to GH¢ 170.8 billion at the end of May this year from the GH¢163.6 billion recorded at the end of March this year.
The new figure represents 39.4% of the projected GDP for 2021.
The domestic component of the total public debt contains the financial sector resolution bond, which was GH¢ 15.2 billion at the end of May 2021.
The International Monetary Fund’s 2021 article IV consultation press release, which contains staff report and statement by the Executive Director for Ghana, the IMF’s Debt Sustainability Analysis (DSA) shows that Ghana remains at high risk of external and overall debt distress under the baseline, even though the public debt is assessed as sustainable going forward.
Source: Mypublisher24.com/Osumanu Al-Hassan