Ghana’s debt-to-Gross Domestic Product ratio is expected to reach 90.7% by the end of 2022, the International Monetary Fund (IMF) has revealed in its Fiscal Outlook Report in the ongoing Annual IMF/World Bank Spring Meetings.
The debt-to-GDP ratio is however expected to fall to 87.8%.
This indicates that Ghana’s debt is expected to be far more than the ¢403 billion recorded as of July 2022.
Also, revenue expressed as a ratio of GDP could hit 14.1% at the end of 2022.
“It will subsequently increase to 14.7% in 2023 and 15.4% in 2024”, the report said.
This will mean the nation is growing its tax collection.
The World Bank in its October 2022 Africa Pulse Report forecast that Ghana will end 2022 with a debt-to-GDP ratio of 104%.
It said the debt is expected to jump significantly, from 76.6% a year earlier, amid a widened government deficit, massive weakening of the cedi, and rising debt service costs.
It also forecasts debt to GDP of 99.7% and 101.8% of GDP in 2023 and 2024, respectively. The size of Ghana’s economy is estimated at $72 billion, whilst it is expected to spend about 70% of revenue this year to service its debt.
“Debt is expected to jump in Ghana to 104.6% of GDP, from 76.6% a year earlier amid a widened government deficit, massive weakening of the cedi, and rising debt service costs. The country’s debt is expected to remain elevated at 99.7% and 101.8% of GDP in 2023 and 2024, respectively.
“Tightening of financial conditions globally along with the fall of the domestic currency widened the sovereign spread by 233 basis points since December 2021”.
As a result, the country lost access to international markets”, the report mentioned.
The World Bank further stated that Ghana needs $1.5 billion in assistance from the IMF, which could help to shore up public finances and regain access to credit markets.
Source: Business Analyst