In his State of the Nation Address, delivered in Parliament today, Tuesday, March 9, 2021, Minority Leader Haruna Iddrisu mocked President Akufo-Addo for his silence on the country’s national debt.
Unlike previous addresses in which the President alluded to the debt left to him by the Mahama government, the Minority Leader claims that the President has remained silent on the current condition of the national debt.
“It’s interesting that he’s keeping quiet about the national debt today. What does it mean to have a national debt? After the President finished reading his speech, the Minority Leader taunted, “We want to hear.” He seconded a motion to postpone the chamber’s proceedings.
The stockpile in December 2020 was equal to 74.4 percent of total economic production as calculated by GDP (GDP).
The debt-to-GDP ratio has surpassed 74% for the first time in more than 15 years. In 2016, it was recorded at 72.5 percent of GDP, which was the closest estimate.
High debts reduce fiscal space by requiring more revenue to fund interest and pay off principal, limiting investment in productive sectors and creating a borrowing period.
According to GDP, the stockpile in December 2020 was equivalent to 74.4 percent of total economic activity (GDP).
For the first time in more than 15 years, the debt-to-GDP ratio has reached 74 percent. It was estimated to be 72.5 percent of GDP in 2016, which was the nearest estimate.
High debt levels reduce fiscal space by necessitating more revenue to finance interest and pay off principal, reducing expenditure in productive sectors and lengthening the borrowing duration.
“The debt service metrics and total funding needs of the country have exceeded the sustainability thresholds. “Non-resident holdings of the public debt, although declining, remain high at 59.9% of GDP, well above the MAC level of 45 percent,” he said at a lecture on the state of the economy.
“On the back of expanded fiscal commitments, public gross financing needs are still above the 10% MAC threshold, implying constrained fiscal space for growth spending,” he said at the University of Ghana, Legon Alumni Lecture last year.
Composition
The data showed that the debt stock was GH¢218.2 billion (62.4 per cent of GDP) in December 2019 but rose by 35.6 per cent to GH¢286.9 billion last December.
It indicated that about GH¢68.7 billion was added to the debt stock within the 12-month period.
The data further showed that the share of the debt into external and domestic were almost at par, although those procured locally were slightly above those owed to foreign creditors.
The foreign component was GH¢139.6 billion, representing 36.2 per cent of GDP while the domestic component was GH¢147.3 billion, equivalent to 38.2 per cent of GDP.
The country remains a high risk debt distress country under the International Monetary Fund (IMF) and the World Bank Group rankings after making it to the list in 2015.
Source: www.GhanaCNN.com
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