BoG reveals what is pushing Ghana's debt stock to unsustainable levels

The Bank of Ghana has disclosed what is pushing Ghana's debt stock to unsustainable levels.

Governor of the Bank of Ghana Dr. Ernest Addison has stated that the current debt-to-GDP ratio of 71 percent could be an indication that government is approaching its limit when it comes to the implementation of its COVID-19 related interventions meant to cushion Ghanaians and businesses against the adverse impact of the global pandemic.

Apart from providing free water to the general public as well as free electricity to lifeline customers as part of efforts to cushion Ghanaians against the hardship brought on by the Coronavirus pandemic, Government has also given out billions of cedis to small, medium and large scale enterprises to ensure they thrive.

READ ALSO : Ghana’s debt stock hits GHS273.8bn 

All these interventions coupled with other financing needs have pushed Ghana’s total public debt stock to GHS273.8 billion as at the end of September 2020.

Commenting on the high debt figure, Dr. Ernest Addison questioned if there will be enough fiscal space to support the COVID-related interventions in 2021.

“Government has been able to cushion households and support businesses in the era of COVID-19. All of the interventions demand money, and they have to be financed, and we are financing them through the issuance of bonds. This is why we are seeing the interest rates on the longer-dated instruments going up and this is what accounts for the debt stock rising to 71 % of GDP.”

“The important point I think is whether the government will have the same fiscal space to be able to continue providing these supports in 2021, because really, we are getting to the limits of what the government can do, without trying to mobilize domestic resources,” he added.