In their views, the government must do more if it is to reduce the country’s debt burden going forward.

The comments follow the latest Bank of Ghana report which shows that Ghana’s debt has reached 138.8 billion cedis equivalent to 68.7 percent of GDP, as at November 2017.

This is up by some 1 billion cedis from the 138 billion cedis recorded a month earlier, i.e. October.

Reacting to this, the Head of Economics Department at the University of Ghana, Professor Peter Quartey told Citi Business News the government must channel its borrowing into investment yielding ventures which will pay off eventually by themselves if possible.

“If the funds were invested in productive activities then you will be able to generate the relevant income or revenue and pay your debts. So looking at where we are, you could see that GDP has grown although debt has also grown and we have not been able to reduce debt to GDP ratio but I think it is a step in the right direction except that we need to do more,” he suggested.

For the CEO of the Institute of Chartered Economists Ghana (ICEG), Gideon Amissah, government’s ambitious projects and the cedi’s performance against major trading currencies affected the rising debt levels.

“The government had to go on with projects such as the free SHS, among others. So even though it had a limited fiscal space, it still had to embark on such projects. Secondly, our exchange rates haven’t been so favourable, considering these factors, then one will not be so surprised that we are having our debts at such levels.”

A Deputy Finance Minister, Charles Adu Boahen in April last year justified the government’s debt re-profiling plan.

He argued that the move saved the economy the burden of seeking one billion cedis every week to repay its debts.

But what has been the effectiveness of this plan one year on?

Professor Peter Quartey believes there is still more to be done and here are his reasons.

“In some years past, the greater proportion of our income went into interest payments and that gave government very little space in terms of financing expenditure so if we have been able to do that then I think it is positive except that I expect more from government. Our debt to GDP ratio is still on the high side and it is not on a very sustainable level.”

Mr. Gideon Amissah also argues that the over-concentration on re-profiling the domestic debt could have limited government’s ability to reduce the debt burden as expected.

“To some extent, the re-profiling was good and beneficial however the indenture, conditions and terms in the external debts may not have allowed us to re-profile the external debt but if we could have done that then I am sure the re-profiling could have helped us to some extent”

There are however some fears Ghana could hit the 70% mark soon if efforts are not intensified to reduce the risks.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Economists critique govt’s debt re-profiling plan appeared first on Citi 97.3 FM - Relevant Radio. Always.

The figure increased from 108.6 billion cedis recorded in June to 109.8 billion cedis in July this year.

This was contained in the latest summary on economic and financial data released by the Bank of Ghana.

The report also reveals that although the country’s total debt has increased from 100.2 billion cedis to 109.8 billion cedis between 2015 and July 2016, the total debt to GDP ratio has declined from the 71.6 percent at the end of December 2015 to 65.9 percent at the end of July this year.

The report, which comes ahead of the 72^nd Monetary Policy Committee meeting of the Bank of Ghana today, said Ghana’s debt stock increased from 101.1 billion cedis to 109.8 billion cedis between January and July this year.

The figure also represents a debt to GDP growth from 60.6 percent to 65.9 percent between the seven month period.

Although the external component of the debts decreased from 60.7 billion cedis to 60.6 billion cedis between the seven month period, the domestic component of the country’s debt increased from 40.4 to 49.2 billion cedis from January to June.

In terms of prices Ghana received for its major trading commodities between January and August this year, the price of cocoa decreased from 3,051dollars to 2,843.8 per tonne; gold prices increased from 1,096.3 to 1,339.3 dollars an ounce.

Similarly, the prices of crude oil increased from 32.4 to 47.2 dollars per barrel.

Meanwhile in the banking sector, the high incidences of Non-Performing Loans increased from 14.6 percent to 19.1 percent by the end of July this year.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Total public debt stock hits Gh¢109.8 bn appeared first on Citi 97.3 FM - Relevant Radio. Always.