TIG Post

Tag: debt stock

  • Every Ghanaian owes GHC19,000 as debt stock hits GHC575.5bn

    The average Ghanaian is currently indebted to the tune of GHC19,000 as the country’s debt stock deteriorates at an increasing rate.

    Ghana’s debt has reached GHS 575.5 billion, which is equivalent to 71.9% of the Gross Domestic Product (GDP), according to the Bank of Ghana (BoG) as of the first half of 2023.

    This represents an increase of GHS 27.7 billion compared to the GHS 547.8 billion debt recorded in January 2023, making it the highest level since January 2023.

    The external portion of the debt, which was GHS 315.8 billion in January (equivalent to 39.4% of GDP), has risen to GHS 328.6 billion in June, constituting 41% of GDP.

    Meanwhile, the domestic component, which stood at GHS 232.0 billion in January (29% of GDP), has increased to GHS 246.9 billion in June, accounting for 30.8% of GDP.

    It’s noteworthy that Ghana’s debt is increasing while the government is implementing a three-year US$3 billion International Monetary Fund (IMF) loan-support program aimed at ensuring the sustainability of the country’s debt.

    “The recent increment in our debt stock is mainly as a result of the weak performance of the cedi against the dollar, Dr Daniel Anim Prempeh, Chief Economist, Policy Initiative for Economic Development (PIED), said.

    “The high debt we’re incurring is because the cedi is not performing well, so, once you convert your debt to the prevailing dollar rate, you should expect increases in the value. Therefore, once the cedi depreciates, you expect the value of most of the dollar denominated debts to increase,” he explained.

    The domestic debt decreased from GHS 247.9 billion in April 2023 to GHS 246.9 billion in June, primarily due to the implementation of the Domestic Debt Exchange Programme (DDEP), as pointed out by economists.

    “We’re hoping that our external creditors will agree for the kind of restructuring that the Government wants to do, and if that’s done, there will be room for us to be able to sustain the high debt that we’re incurring,” Dr Anim-Prempeh said.

    “The impact of the IMF first tranche will not be immediate. It’s until the end of the fiscal year when the analysis is done before we’ll be able to see any significant impact that it might have had within the domestic economy,” he said.

    He urged the Government to reduce its appetite for both domestic and external debt to balance the credibility and investor confidence associated with the implementation of the IMF programme.

    He added that: “Even if all the US$3bn is released, it will not bring about any immediate growth and stability within the macroeconomic environment, it will take a certain time to actually feel the impact.”

    Dr Anim-Prempeh urged government to “focus on policies that will bring about macroeconomic stability by being fiscally disciplined as we enter into an election year in 2024.”

  • Nigeria’s debt profile under Buhari rise by N1 trillion in just three months

    Reports from the Debt Management Office (DMO) indicate that Nigeria’s overall debt stock increased to N44.06 trillion as of September 30, 2022, up from N42.84 trillion on June 30.

    According to a recent announcement by the Debt Management Office, Nigeria’s debt profile does not appear to be decreasing as the amount increased once more by over N1 trillion in just three months, between June and September 2022.

    According to the DMO, Nigeria’s overall debt stock increased to N44.06 trillion as of September 30, 2022, up from N42.84 trillion on June 30.

    The debt “comprises the Total Domestic and External Debt Stock of the Federal Government of Nigeria (FGN), all State Governments, and the Federal Capital Territory (FCT),” the Debt Management Office said in a release on Friday.

    According to DMO, the increase in the public debt stock was largely due to new borrowings by the federal government to finance the deficit in the 2022 Appropriation Act, as well as new borrowings by state governments.

    With a proposal to further borrow over N11 trillion to fund the 2023 budget deficit, President Muhammadu Buhari may bequeath a debt profile in excess of N55 trillion when he leaves office next May.

    Former President Olusegun Obasanjo, under whose leadership Nigeria cleared its external debts, earlier in the year criticised the incumbent regime for accumulating debt for future generations, describing it as a “foolish” and “criminal” act.

    But Buhari’s media adviser, Femi Adesina, justified the huge borrowings, saying the regime is borrowing for infrastructural development, unlike past governments who looted loans.

    SaharaReporters had in September reported how amid the gruelling economic challenges facing the country, the Buhari-led government between January and March 2022 incurred N2trillion in Public Debt, bringing total debts to a record N41trillion.

    The country in the first quarter of 2022 alone spent an average of N9.94 billion on debt servicing.

    “A World Bank report showed that in terms of debt to GDP ratio, Nigeria is low but for debt service to revenue ratio, we are very high. So, if you look at the tax-to-GDP ratio of these other countries, they are in multiples of Nigeria.

    “The World Bank survey report of about 197 countries revealed that Nigeria is number 195, meaning we beat only two countries and that was Yemen and Afghanistan and I don’t think we want to be like those places,” DMO’s head, Patience Oliha, had warned in September.

     

     

  • Ghana’s debt jumps from GH¢120bn to GH¢450bn in last 6 years

    Ghana’s total debt stock has shot up to GH¢450 billion in 2022 from a total of GH¢120 billion in 2017, Finance Minister Ken Ofori-Atta has revealed.

    The current debt stock means Ghana has borrowed over GH¢300 billion since the Akufo-Addo-Bawumia-led government assumed power in January 2017.

    Appearing before the ad-hoc committee probing the grounds of censure filed by the Minority in Parliament, Mr Ofori-Atta said despite the astronomical increase in Ghana’s debt stock, the focus should be on what the loans have been used for and its benefits to the nation.

    Mr Ofori-Atta stated that the GH¢330 billion loan has been invested in One-District-One Factory, education, interchanges, Planting for Food and Jobs and other sectors that he claims have benefitted the state.

    The Finance Minister also dismissed suggestions that he has mismanaged the country’s finances.

    “Fiscal recklessness leading to the crash of the Ghana cedi which is currently the worst performing currency in the world” was one of seven grounds put forward by the Minority to demand the removal of Mr. Ofori-Atta.

    He added that on the contrary, the government’s “strenuous efforts to protect the public purse is what has helped”.

    He argued that he has as required of him always presented government revenue and expenditure propositions to Parliament, who have in turn raised no concerns.