Cost of interest payment on public debts increased to GH¢10.7 billion
In 2017, a provisional amount of GH¢13.3 billion was recorded as payment of interest on public debt and the amount is projected to increase to GH¢14.9 billion in 2018.
Executive Director of the Institute for Fiscal Studies (IFS), Professor Newman Kusi, has revealed that the cost of interest payment on public debts had increased from GH¢2.4 billion in 2012 to GH¢10.7 billion in 2016.
According to him, in 2017, a provisional amount of GH¢13.3 billion was recorded as payment of interest on public debt and the amount is projected to increase to GH¢14.9 billion in 2018.
Speaking at a discussion on Ghana’s public debt organized by the IFS on the theme: “Ghana’s Growing Public Debt-Implications for the Economy,” Professor Newman Kusi said in order for government to achieve the medium term debt targets, government would have to adopt a comprehensive debt management strategy that will put caps on the levels of gross concessional and non-concessional loans that become liabilities to the government.
He added “Ghana’s rising interest cost cannot be contained through debt re-profiling as the current debt management strategy seems to suggest…Proactive debt management strategy is therefore needed to reduce interest payments and mitigate risks to the public debt profile”.
The executive Director said weak domestic revenue mobilization was a key factor in Ghana’s debt crisis, with domestic revenue to Gross Domestic Product (GDP) levels below that of its sub-Saharan African peers.
According him, Ghana’s domestic revenue to GDP ratio averaged 20 per cent in recent years, way below the SSA average of 27 per cent of GDP, which meant that Ghana’s domestic revenue was short of what its economic potential and institutional development could generate.
He noted that Ghana’s current debt levels, which stood at about GH¢146.2 billion as at November 2017, had implications for Ghana’s economy, particularly due to high debt service cost.