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The total public debt has increased by 37.8 per cent of Gross Domestic Product (GDP) from US$11.2 billion in September 2010 to US$14.8 billion, which is equivalent to 39 per cent GDP) in September 2011. The debt stock, however, remains sustainable in terms of finding the resources to retire them as they fall due. This means that the total debt stock as of September this year is US$3.6 billion or 1.2 per cent more than the debt position in September last year, mainly as a result of medium-term government bonds issued to finance arrears and road projects that could not be completed due to lack of funds. As at the end of September 2011, 48 per cent of the total public debt stock amounted to US$7.1 billion constituted external debt, equivalent to 19.1 per cent of GDP. The increase in external debt stock is attributed largely to a positive net flow of project loan disbursements compared to debt service payment on existing loans. Domestic debt, which represented 51 per cent of the total debt stock, also amounted to US$7.5 billion or 19.9 per cent of GDP, which rose from the US$5.68 billion within the same period last year. �The increase in domestic debt is largely explained by the issuance of the five-year and three-year fixed rate bonds to settle arrears owed to contractors and securitisation of TOR debt owed to Ghana Commercial Bank,� the Minister of Finance and Economic Planning, Dr Kwabena Duffuor, stated. As of the end of 2007, more than GH�1.9 billion fell due in arrears, including abot GH�850 million owed by the Tema Oil Refinery (TOR) to the Ghana Commercial Bank (GCB). Debt Sustainability Assessment An analysis on how sustainably Ghana can meet its debt repayment obligations has been conducted in collaboration with the International Monetary Fund (IMF) and the World Bank. The analysis showed that the public debt was sustainable in the medium to long term, even when compared to the external debt thresholds. This was largely due to the solvency and liquidity condition of the economy which demonstrates the country�s ability to service the public debt over the medium to long term. In addition to that, the combination of fiscal consolidation sustained over the medium to long term and stronger real GDP growth, higher export levels and post-oil and gas production contributed to a more favourable debt sustainability baseline. �At a ratio of 33.6 per cent of GDP in 2008, the public debt is expected to rise to 37.2 per cent by 2015, by which period the China Development Bank (CDB) and other pipeline loans would have been disbursed,� the finance minister told Parliament as contained in the 2012 Budget and Economic Policy Statement of the government. The government has received Parliamentary approval to sign a US$3 billion from CDB to finance infrastructural projects, including the Eastern corridor roads and gas processing plants in the Eastern Region of Ghana. The GRAPHIC BUSINESS has gathered that the government would sign the Chinese loan in December soon after the IMF Board has approved Ghana�s fifth Extended Credit Facility which is expected to raise the country�s non-concessional borrowing limit from US$800 million. One of the reasons the country has achieved fiscal consolidation in a relatively shorter time is attributable to the unprecedented stability on the downstream petroleum from. Although domestic consumption has been increasing in addition to a rising crude oil price on the international market, the economic managers have done something right that has been taken for granted all along. On the advice of consultants and experts at the Ministry of Finance and Economic Planning, with appreciable inputs from the National Petroleum Authority (NPA), the government hedged both side of its oil, the production or export end, and the purchasing or import side, a decisive move that has helped petroleum prices at the pump stable for more than 18 months. Petroleum Hedging Programme The government started with subsiding the ex-pump prices of petroleum products, and as of September 30, 2011, the cost came to GH�267.61 million, and in 2012 when crude oil price is assumed to average US$110.23 per barrel, a total of GH�364.94 million has been estimated. Should the government couch this entire subsidy, it would have debilitating impact of certain sectors of the economy and therefore retain the potential of slowing the entire growth in the economy, while increasing budget deficit. It was to mitigate such costs that the government in May last year hedged the import end of crude oil prices. It later hedged the production side. The finance minister explained that the hedge arrangement was a simple insurance mechanism meant to mitigate the impact of crude oil price fluctuations on crude oil receipts. �The call option is adopted to manage oil import prices whilst the put option is adopted to smoothen fluctuations in crude oil export receipts. Madam Speaker, the hedging has contributed significantly to the stability of the economy in 2011,� Dr Duffuor told Parliament.