Ken Ofori-Atta, Finance Minister
The International Monetary Fund (IMF) has stated that the ratio between Ghana’s debt servicing and revenue which falls at 30 percent is twice as much compared to countries of similar features.
According to IMF’s Resident Representative, Dr. Albert Touna-Mama, the call follows the outstanding GH¢215 billion the country owes the World Bank.
He thus described as worrying the borrowing rate of Ghana.
“When we think about debt and borrowing, I want to talk about the fact that we don’t only measure it with respect to GDP. An important metric that we look at and in the case of Ghana is a metric that is of concern, that is, debt service to revenue.”
“We use debt service to revenue as a proxy of how sustainable the debt of Ghana is. At the moment, that ration is close 30 percent. When we take that for countries of similar features, it should be below 18 percent. This is twice as much as what it should be. So, of course, we are concerned about the borrowing of Ghana,” he explained.
Dr. Albert Touna-Mama stated that the GH¢215 billion debt situation Ghana finds itself in, puts the country in a very dire position.
Meanwhile, the World Bank has cautioned Ghana against heaping its external debt stating that the country is currently rated as a moderate to high-risk debt distressed country.
The World Bank, therefore, warned that Ghana must tread cautiously in order not to cross acceptable thresholds of debt sustainability.
Finance Minister, Ken Ofori-Atta, announced in the 2019 budget that government is projecting to achieve GH¢67.1 billion in total revenue, representing 16.9 percent of GDP, in the 2020 fiscal year.
He noted that the country is expected to use GH¢21.7 billion which translates to about 5.4 percent of GDP to service interest on its debt.
Of this amount, he further said domestic interest payments will constitute about 76.3 percent and amount to GH¢16.6 billion.
