Latest figures from the February 2015 Monetary Policy Committee (MPC) meeting have put the new public debt figures at GH76.1billion as at December 2014. This figure which is a total of external and domestic borrowing and interest payments is now 67% of the country’s Gross Domestic Product (GDP).
Ghana’s debt is only now three points away from hitting 70 percent, and even now considered as unsustainable.
According to Joy News the government contracted a whooping loan amount of GH10 million in just four months to bring Ghana’s public debt to GH76 bn. The Bank of Ghana at a Monetary Policy Committee Meeting in November 2014 disclosed that he public debt as at August 2014 stood at GH66 billion.
Deputy Minister for Finance, Mona Quartey explained that GH10bn in four months may not mean extra borrowing but could simply be as a result of default payments on the interests on debts. But financial experts say the Deputy Minister’s explanation in itself hints of the unsustainable nature of the country’s debt.
“Default in payments on interests on debt are in themselves indicators of the unsustainability of the debt” a financial expert told Scandal.
Last week government communicators crossed swords with NPP’s Vice Presidential Candidate, Dr. Mahamudu Bawumia when he suggested that Ghana’s public debt was now $27 billion and added that the country was now inching towards HIPIC status.
Addressing the media after the MPC meeting the Governor of the Bank of Ghana Dr. Henry Wampah said Ghana’s total public debt rose to GH76.1 billion, representing 67.1 percent of GDP, up from GH51.9 billion, (55.3 percent of GDP) in 2013.
This included the stock of domestic debt which stood at GH34.6 billion, representing 30.5 percent of GDP at the end of 2014, up from GH26.7 billion (28.4 percent of GDP) in 2013.
The external debt recorded US$13 billion, (36.6 percent of GDP) at the end 2014 up from US$11.5 billion, (26.9 percent of GDP) in 2013.
The Governor said provisional estimates for the balance of payments for 2014 recorded a deficit of US$85.2 million, a significant improvement from the US$74.2 million recorded in 2013 adding that this was due to a marked improvement in the current account.
“The current account deficit narrowed by US$2.1 billion from a deficit of SU$5.7 billion (11.9 percent of GDP in 2013 to US3.6 billion, (9.2 percent of GDP) in 2014.
“This was driven by an improvement in the trade balance. The balance on merchandise trade improved form a deficit of US$3.8 billion, (7.9 percent of GDP) in 2013 to US$1.6 billion (4.1% of GDP) at the end of 2014. The services, income and transfer account net recorded a deficit of US$$2billion in 2014 compared which a deficit of US$ 1.9 billion in 2013.
He stated that the capital and financial account decreased to US$3.3 billion form US$5.4 billion in 2013, adding that it was mainly due to a US$777.2 million decrease in net inflow of official capital, a US$1.4 billion decline in short-term capital while net portfolio investments increased by US$177 million.
For the first month of 2015, the trade balance recorded a deficit of US$257.4 million compared to a deficit of US$231.9 million in January 2014.
Exports were provisionally estimated at US$900.7 million while imports were US$1.2billion.
Gross foreign assets (defined as gross international reserves plus encumbered assets and petroleum funds) stood at US$4.9 billion at the end of January 2015, representing 2.9 months of imports, unchanged compared to the same period in 2014.
In December 2014, gross foreign assets were US$5.5 billion, equivalent to 3.2 months of imports.
The local currency
Commenting on the performance of the cedi, Dr. Wampah said the cumulative depreciation of the local currency for 2014 was 31.2 percent compared to 14.5 percent in 2013, adding that in January 2015, the cedi depreciated by 1.3 percent compared to 7.8 percent depreciation a year ago.
Between January and June 2014, it depreciated by 267 percent but remained relatively stable during the second half, depreciating by 4.5 percent.
Ghana is in some doggy talks with the international Monetary Fund (IMF) for a bail-out program. The completions of these have been postponed three times already and many are wondering whether a deal can actually be clinched.
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