Finance Minister Ken Ofori-Atta has said that more than half of Ghana’s total revenues and more than 70% of the country’s tax revenues are used to pay off the State’s debts.
Speaking at the launch of Ghana’s Domestic Debt Exchange Programme on Monday, December 5, 2022, the Finance Minister stated that Ghana’s debt sustainability analysis revealed that the country’s debt is unsustainable.
“The Debt Sustainability Analysis (DSA) demonstrated unequivocally that Ghana’s public debt is unsustainable, and that the government may not be able to fully service its debt down the road if no action is taken.
Indeed, debt servicing is now absorbing more than half of total government revenues and almost 70% of tax revenues, while our total public debt stock, including that of State-Owned Enterprises and all, exceeds 100% of our GDP. This is why we are today announcing the debt exchange which will help in restoring our capacity to service debt.”
The Minister cited that the reasons for the unbridled ballooning of the State’s debt included the “Covid-19 pandemic, rising global food prices, rising crude oil & energy prices; and the Russia-Ukraine war adversely affected Ghana’s macro economy, with spillover to the financial sector.”
“The combination of adverse external shocks has exposed Ghana to a surge in inflation, a large exchange rate depreciation and stress on the financing of the budget, which taken together have put our public debt on an unsustainable path,” the Minister added.
Mr. Ofori-Atta previously stated that the country’s total debt stock would rise to GH450 billion in 2022 from GH120 billion in 2017.
Ghana is currently requesting assistance from the International Monetary Fund.
While the country has placed a moratorium on public-sector hiring, it has also announced a debt restructuring program to reduce the country’s debt burden.
