Ghana’s debt hits GH¢159.4 billion in August 2018 – Bank of Ghana

The country’s public debt stock has reached ¢159.4 billion as at August 30, this year according to the Central Bank’s September summary of Economic and Financial data.

The data also shows that the stock of debts went up by ¢5.1 billion from May this year to August.

From the data, the domestic debt accounted for ¢73.8 billion cedis representing 30.6 percent of the total value of the economy. Also, $18.2 billion of the total debt were loans taken from outside the country.

This translates into ¢85.5 billion, when denominated it in cedis and represents 35.4 percent of Gross Domestic Product (GDP). The ¢159.4 billion debts translate into 65 percent of Ghana’s GDP.

Some economists have argued that this may not be that bad because the country may not have crossed the dreaded 70 percent mark which could result in Ghana being classified as a debt distress country.

This could increase the cost of the country’s loans that are being serviced and the ones that government intends to take. Some have also argued that because the economy has expanded over the last months, it means that the country has gotten a lot of assets to pay off these debts on time.

According to data put out by the Ghana Statistical Service in April, the value of the country’s economy at about ¢215 billion.

Possible reasons for debt stock increase

There are no official reasons for now as to what caused the debt numbers to increase by over 5 billion cedis in just three months to ¢159.4 billion cedis.

However, Joy Business understand some fresh borrowing in Eurobonds, treasury bills issuance and cedi’s depreciation might have led to a spike in the debt numbers over the past three months.

Sources also say recent ¢2.2 billion bond issued to deal with the UT and Capital Banks collapse could have also contributed to the increase.

Some of the borrowings, they say was also used to pay off expensive debts that were maturing.

Since the beginning of the year, the debt stock has gone by almost ¢14 billion cedis, which could be linked to the $2 billion Eurobond raised this year.

Borrowings for Half Year

According to government’s issuance calendar for the first half of this year, it borrowed about ¢22.4 billion through bonds and Treasury bills.

However, only ¢4.6 billion can be classified as fresh borrowings which were used to meet the government’s financing needs. The remaining ¢17.8 billion was used to finance debts that were maturing.

The calendar showed that it took ¢11.3 billion in the second half of this year and ¢11.1 billion in the second quarter of this year.

Developments in the Banking sector

The Banking sector showed some mixed results in the terms of its performance over the last 4 months. Total deposits and loan advances saw some significant increase compared to the August 2017.

For instance, total Industry Deposits increased from ¢53 billion in August 2017 to ¢67.7 billion, representing a growth of 26.2 percent. Total advances also reached ¢40 billion, representing 11.8 percent growth.

Total assets of the banks in the country were also in a good position, after going up by 21.5 percent to reach ¢104 billion.

However, Non Performing Loans was still a challenge as its still in the 21 percent range. For instance in August 2017, industry Non Performing Loans stood at 21. 9 percent, while in August 2018 it stood at 21.3 percent.

External Sector Developments

Ghana’s earnings from exports continue to increase.

According to the Central Bank data, exports earnings ending August 2018 was $10 billion compared with 9.1 secured in August 2017.

Gold brought in $3.8 billion, cocoa was ¢1.4 billion while crude oil brought the country $2.9 billion. With the exception of crude oil, all the other commodities did not well compared to what the country earned in 2017.

Imports

A total of ¢8.6 billion was spent to import the country needs like petroleum products and other stuff.

Oil imports ending August this year accounted for ¢1.6 billion, while on other needs that the country spent $7 billion.

From the exports and imports numbers its clear that there was a trade surplus. This would result in a trade balance of $1.4 billion.

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