Ghana’s debt stock hits ¢138.9 billion – BoG

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Ghana’s total debt stock ending September this year reached ¢138.9 billion according to Bank of Ghana’s (BoG) report on the summary of economic and financial data for this year.

The report was released after the Monetary Policy Committee of the Central Bank met from Wednesday to Friday to review the health of the economy.

The Committee which is chaired by the Governor of the Bank of Ghana Dr Ernest Addison is expected to meet the media on November 27, to announce a “new” policy rate, which currently stands at 21 percent.

his is largely expected to influence the cost of the credit over the next three months.

Breakdown of debt numbers

The data showed that total public debt increased marginally from June to September this year.

According to the data, in three months, the debt stock increased by ¢3 million as compared to the previous months where it even went up by over ¢3 billion.

The summary of economic and financial data puts Ghana’s debt –to-GDP ratio at 67.4 percent as at the ending September 2018.

This could mean that government might be on track to achieving its end-of-year Debt –to-GDP ratio of around 70 percent. Domestic debts accounted for ¢63.3 billion, while external stood at $17.2 billion.

Possible reasons for the marginal increase in the debt stock

It is not clear for now what might have contributed to this marginal increase in the total public debt despite some significant borrowings by during this period.

Could it be the government’s debt re-profiling strategy? The decision to clear some of the debts that matured? Or the marginal stability of the cedi during the period that the computation was done by the BoG.

Government according to the 2017 budget is hoping to pay ¢13.2 billion as interest payments. The amount is expected to increase by some ¢1.7 billion to ¢14.9 billion in 2018.

This amount could go up further if the cedis depreciates further than the value projected by managers of the economy.

Government’s borrowing plan for 2017

Government is hoping to raise some ¢72 billion through bonds and Treasury Bills by December this year.

This amount would be realised only if it secures the entire amount targeted as captured in the issuance calendar for bonds and treasury bills for this year.

The calendar showed that government may have borrowed ¢17.4 billion in the first quarter of this year, ¢22.2 billion in the second quarter of this year and ¢17.4 billion from July to September this year and ¢15 billion for the last quarter of this year.

A chuck of the amount raised is for rollover maturities, whiles a small portion which would come in as “fresh cash”, would be used to finance government’s operations.

How other sectors fared according to the Data

The data showed that Ghana’s earnings from exports witnessed some significant growth. It reached $10.2 billion in October this year.

This actually represents a little over $2 billion increase, compared to the $8 billion secured for the same period in 2016.

Gold brought in $4.3 billion, Cocoa- $2 billion and crude oil, $1.9 billion.

However, on the import side, Ghana ended the month of October spending $9.3 billion to finance oil and other goods. This resulted in a trade balance of $708 million.

The country’s international reserves as at October 31, 2017, stood at $6.9 billion, representing 3.9 months of import cover reserves.

Banking sector developments

Commercial banks in the country were still struggling to recover loans that they fear might go bad as the data puts the percentage of industry Non Performing Loans (NPL) ending October at  21.6 percent, up from the 19 percent for the same period.

Despite this challenge, total banking assets for the first 10 months of this year reached ¢88.9 billion compared to ¢73.8 billion for the same period for last year.

Loan advances also stood at ¢38 billion ending October this year. Despite the increases in the actual amount, real annual growth slowed compared to the same period for last year.

 

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