The Government of Ghana added a total debt of GHC 43.5 billion to the country’s debt stock in the first seven months of 2020, bringing the total debt stock of the country to GHC 263.1 billion, according to figures from the Bank of Ghana.
Many have criticized the New Patriotic Party(NPP) administration for preaching against borrowing in opposition but borrowing heavily once it won power. But the administration has blamed the ballooning debt on expenditure incurred on cleaning the banking sector and paying debt in the energy sector, maintaining that it has managed the country’s debt better than its predecessor, the National Democratic Congress(NDC) government.
A Deputy Minister of Finance, Kwaku Kwarteng has explained that the country has had “to incur debts because of COVID-19”, explaining that “if you look at the global average, different situations will call for different considerations.”
He stressed that even though the country will like to keep the debt to GDP below 70%, the country has had to borrow more given the current situation.
“So we want to do below 70 but when you have COVID-19 to deal with. When you have a financial sector situation to deal with and you have legacy debt, you may have to incur some debt before you stabilize the economy,” he told CitiNews in an interview.
The International Monetary Fund(IMF) has warned that the country to be careful with its debt situation. The fund has noted that debt of many sub-Saharan countries is reaching unsustainable levels and something drastic needs to be done to ensure that further debt accumulation is curtailed.
Meanwhile the Finance Minister has said that the country will borrow more to be able to finance some key government expenditure. He made this known when he presented the budget for the first quarter of 2021.
“Mr Speaker, we will require an amount of GH¢27.4 billion to carry on the services of government until the expiration of three months from the beginning of the 2021 Financial Year,” he told Parliament on Wednesday, October 28, 2020″ he told parliament.
