by CHARLES BENONI OKINE
The country’s total public debt increased to GH¢105.1 billion as at the end of May this year, up from GH¢104.5 billion the previous month.
This represents 66.4 per cent of Gross Domestic Product (GDP) — the total value of goods and services produced in a country within a given year.
However, it is significant to note that in dollar terms, the debt profile of the country dropped marginally from US$27.5 billion in April to US$27.4 billion in May.
This indicates that the rise in the cedi-denominated total public debt was a direct result of the exchange rate, which is now at GH¢3.94 to $1.
According to the summary of the country’s macroeconomic and financial data posted by the Bank of Ghana on July 18, the external debt in cedi terms stood at GH¢61.9 billion at the end of May, up from GH¢61.4 billion in April. The current external debt, therefore, represents 39.1 per cent of GDP.
On the domestic front, the country’s domestic debt shot up marginally from GH¢43.1 billion in April to GH¢43.2 billion in May. This pushed the percentage figure from 27.2 per cent in April to 27.3 per cent in May.
Prediction comes true
A couple of months ago, the Finance Minister, Mr Seth Terkper, predicted that the nation’s debt, which measured 71 per cent of gross domestic product in 2015, “will improve on account of positive growth.”
The economy expanded by 4.9 per cent in the first quarter from a year earlier, compared with a revised 4.1 per cent in the preceding three months.
Brexit on Ghana
Meanwhile, at a press briefing in Accra, the Governor of the Bank of Ghana, Dr Nashiru Ishahaku, said based on Ghana’s strong relations with both the European Union (EU) and the UK, the impact of Brexit is likely to transmit through the trade sector, foreign direct investments, budgetary support and the domestic currency market.
However, he noted that “it is too early to determine the full implications but initial assessments indicate that the local currency appreciated sharply by about 5.7 per cent month-on-month against the pound sterling in June 2016, compared with 1.3 per cent depreciation in May, reflecting the Brexit effect”.
Dr Ishahaku added: “Going forward, the potential fallouts from post-Brexit negotiations will be closely monitored to take the necessary policy actions to dampen any adverse effects on the domestic economy.”
The UK’s vote to leave the EU has dominated global developments since the last MPC meeting, and the implications were immediately felt across global currency, commodities and equity markets.
Although the sharp depreciation of the pound sterling against major trading currencies has somewhat reversed, the current uncertainties and volatilities in global financial markets may persist until the post-Brexit negotiations commence with the EU, Dr Ishahaku said.
Growth prospects
On the country’s growth prospects, the governor said the rest of the year would be impacted positively by the stability in the foreign exchange market, continued improvement in consumer and business sentiments and the realisation of additional oil and gas production from the TEN oil fields.
However, he was quick to indicate that risks to the growth outlook, such as the tight credit conditions, electricity supply shortfalls and continued fiscal tightness, may moderate the pace of economic expansion.
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