Public Debt Hits GH¢286.9 billion; BoG Maintains Policy Rate

Dr. Ernest Addison

Ghana’s total public debt stock has risen to 74.4 percent of Gross Domestic Product (GDP) representing GH¢286.9 billion at the end of November 2020.

The Bank of Ghana (BoG) made this known on February 1, 2021, comparing the amount with 62.4 percent of GDP (GH¢218.2 billion) at the end of December 2019.

“The elevated fiscal path has impacted the stock of public debt which rose to 74.4 percent of GDP (GH¢286.9 billion) at the end of November 2020 compared with 62.4 percent of GDP (GH¢218.2 billion) at the end of December 2019,” the Bank said in a news release.

It added that “Of the total debt stock, domestic debt was GH¢147.3 billion (38.2 percent of GDP), while external debt was GH¢139.6 billion (36.2 percent of GDP).”

According to the release, total liquidity increased significantly during the year driven by government’s fiscal stimulus programme, the complementary monetary policy measures
implemented during the year to mitigate the impact of the COVID-19 pandemic, and the monetization of government bonds to pay depositors in the SDI sectors, as well as the central bank’s purchase of a GH¢10 billion COVID-19 bond issued by the government.

These policies led to a large expansion in the balance sheet of the central bank, the release said.

“As a result, Net domestic assets increased by 42.2 percent year-on-year in 2020, compared with a modest 15.0 percent growth in 2019, while net foreign assets contracted by 12.6 percent, compared with 51.7 percent growth in the same comparative periods.”

“Broad money (M2+) grew by 29.6 percent in 2020, compared with 21.7 percent growth in 2019. The expansion in M2+ was mainly on account of increased growth in net domestic assets of the depository sector. The growth in M2+ reflected in expansion in currency outside banks and domestic deposits,” it said.

Meanwhile, the BoG said it has maintained the policy rate at 14.5 percent.

By Melvin Tarlue