Government has revealed that the country is at high risk of debt distress and has agreed on a debt management strategy with the International Monetary Fund (IMF).
This comes on the back of the current debt sustainability analysis conducted by the country, as part of the negotiations to secure support from the MF.
Delivering the 2023 budget statement and economic policy on the floor of Parliament on Thursday, Finance Minister, Ken Ofori-Atta noted that the sustainability of Ghana’s debt has been continuously affected by the negative impact of exchange rate depreciation, particularly on external debt, as well as the crystallization of significant contingent liabilities in recent years.
“Despite the heightened debt levels, government remains committed to ensuring that debt is brought to sustainable levels over the medium to long-term. To this end, we will implement a debt exchange programme to address the challenges identified in the portfolio in collaboration with all relevant stakeholders including the Ghanaian public, investor community and development partners”, he said.
Already, provisional debt data as at end September 2022 shows a significant increase in Ghana’s public debt, largely due to external factors. The end-September 2022 provisional figures indicate that total gross public debt stood at GH¢467,371.31 million (US$48,871.34 million), representing approximately 75.9 percent of GDP.
While assuring that government is committed to ensuring debt is brought to sustainable levels in the medium- to long-term, he further noted that government will continue to strengthen its oversight of all State Owned Enterprises, in particular, financial and energy sectors.
The Minister noted that in line with government’s objective to restore debt sustainability, concessional loans will continue to be the preferred financing option for projects.
“In line with our objective to restore debt sustainability, concessional loans will continue to be the preferred financing option for projects. We, however, recognize that there may be cases where non-concessional borrowing may be required to finance critical transformative projects. Such financing will be determined within limits that are consistent with our debt sustainability programme.”
“We will inform this House, at the Mid-Year Fiscal Policy Review, of projects that will be financed within our non-concessional borrowing limits. Accordingly, we will not publish any list of projects to be financed from external non-concessional loans in this budget, previously titled ‘Appendix 10C,” he added.