Ghana’s debt stock is expected to hit the GH300 Billion by the end of the 2021 fiscal year; and from all projections made by the International Monetary Fund, there is nothing the country could do to curtail the upward surge in the country’s debts stock.
Many analysts are however, worried that if the current upward trend in Ghana’s debts is not halted, the country may head again into the group of Highly Indebted Poor Counties (HIPC).
HIPC consist of group of some 39 developing countries with "high levels of poverty and debt over-hang which are eligible for special assistance from the International Monetary Fund and the World Bank”.
It’s more of a concern, when the IMF paints a further gloomier picture by suggesting that the current fiscal trend will continue till 2005 with some nominal gains only being recorded in 2016.
And even at that, the IMF warns, the country can only achieve the slight fiscal debts drop if Ghana adhere and resort to strict prudent spending and a cut in expenditure.
It’s at this point that some analysts believe Ghana’s re-entry into the comity of HIPC nations looks all imminent despite being absolved by the IMF last year.
The IMF allayed the fears of Ghanaians last year, when it Country Representative disclosed that Ghana was yet to be re-instated into the Highly Indebted Poor Countries Initiative on October 30th, 2020.
By the end of 2020, the heavily indebted countries included Afghanistan, Benin, Bolivia, Burkina Faso and Burundi. The others were Cameroun, The Central African Republic and Chad.
Ghana first reached the decision to enter HIPC in 2002 under President John Agyekum Kufuor’s administration; but left after reaching a completion point in July 2004.
In its April 2021 Fiscal Monitor for low income of developing countries in sub-Saharan Africa countries, the IMF projected that “Ghana’s public stock-debt will move above GHS300 billion before the end of 2021”.
That translates into Ghana’s debt stock hitting an all-time 81.5 % of Gross Domestic Product by the end of the same period. That’s not all. The shock revelation is that the country’s debts, the IMF projects will further increase in the 2022 fiscal year.
The Fund noted in its Fiscal Monitor: “Ghana’s debts to GDP ratio will increase to 83.2 %, adding the trend will continue with a “further GDP increase from the years 2023 to 2025”.
The IMF however, offered a glimmer of hope when it stated the country’s debts stock pile will drop marginally to 85.5 percent in 2026.
As stated, analysts have suggested that the disturbing and distressed state of Ghana’s economy place the country on the cusp of a Highly Indebted Poor Country (HIPC) because Ghana, is likely to endure a distressed economy with revenues likely to be generated going into the servicing of both local and foreign debts.
According to financial analysts, the increased debts-stock poses a high risk of default, which consequences, are likely to place the country in a very tight fiscal position.
The Bank of Ghana revealed last year that Ghana’s overall public debts stock in December 2020, was an unprecedented high of GHCS291.6 billion, and that was about 76.1percent of the GDP ratio.
External debt for the country on the other hand, according to the Central Bank, reached GHS141.8 billion which was nearly US24.7 billion, an equivalent to 37.0 percent of GDP ratio.
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