Every Ghanaian owes about GH¢3,512.81 in government debt, population projections made by the Ghana Statistical Service (GSS) as at end 2015 suggest.
According to the Bank of Ghana (BoG), Ghana’s debt stock rose to GH¢97.2 billion ($25.6billion) in December 2015, equivalent to 72.9 percent of GDP.
Out of this, total external debt amounted to GH¢57.8 billion, 43.4 percent of GDP and domestic debt was GH¢39.4 billion (29.5 percent of GDP).
According to Eric Kofi Kontoh, an economist and analyst, who recently commented on the implications of the total national debt for every citizen in a recent analysis, government added GH¢73 billion between 2011 and 2015, representing an average growth rate of 75 percent per year to the public debt.
“As the debt continues to go high, the liability of every Ghanaian is also rising…Within the last four years, Ghana’s total debt stock rose to GH¢97.2 billion (72.9 percent of GDP) as of 2015, up from GH¢24 billion (42.2 percent of GDP) as at the end of 2011.”
He referred to a recent study published by the International Monetary Fund (IMF) which said the level of the debt was not much of a concern but the growth of the government debt posed long-run negative consequences on economic growth in his analysis.
He said the IMF study found that debt thresholds for developing countries such as Ghana ranged from 30 percent to 60 percent, adding that those of advanced economies ranged from 60 percent to 80 percent.
Total revenue and grants as a percentage of GDP as at the end of 2015 were estimated at 23.3 percent compared to total debt-to-GDP ratio of 72.9 percent.
The 2016 Budget statement estimates total interest payment at GH¢10.5 billion, equivalent to 6.6 percent of GDP.
The interest payment as a percentage of GDP was 2.8 percent as at 2009, 4.3 percent as at 2014 compared to 6.6 percent budgeted for in 2016.
Furthermore, the economist cited Fitch’s Ratings (2015), which depicts Ghana’s interest payment burden as highest amongst its rated sub-Saharan Africans sovereigns, adding that interest payments consumed almost one-third of government revenues.
Mr Kontoh explained that the amount budgeted by government for interest payment in the 2016 budget was higher than funds allocated to government units; comprising statutory payments into the National Health Insurance Fund, Ghana Education Trust Fund, District Assemblies Common Fund, Road Fund, Petroleum-Related Funds, transfer to the Ghana National Petroleum Company and retention of internally-generated funds by MDAs estimated at GH¢9.7 billion.
Moreover, he indicated that the budgeted interest payments for 2016 was higher than the total amount of GH¢6.7 billion allocated for capital expenditure in the country.
“It is also higher than the expected tax proceeds from domestic goods and services estimated at GH¢7.4 billion.”
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