As government borrows to meet its fiscal obligations, Economist Dr. Eric Osei-Assibey has expressed concern over the growing public debt stock.
Latest figures released by the Bank of Ghana showed that the country’s total debt as at July this year was estimated at 110 billion cedis.
The figure increased from 108.6 billion cedis recorded in June to 109.8 billion cedis in July this year.
Speaking to Citi Business News, Dr. Eric Osei-Assibey maintained that with a decrease in the budget deficit there should have been a corresponding improvement in the debt stock.
According to him, the Finance Ministry’s decision to enhance fiscal consolidation by cutting down on expenditure, as well as borrowing for long term should have showed in decreased debt stock.
“That is the reflection that has to be seen but it appears it’s the opposite, it is ironic to see your fiscal deficit narrowing yet your debt stock is widening,” he said.
Touching on moves by the Ministry of Finance to improve government’s expenditure and revenue generation pattern, Dr. Osei-Assibey was of the view that two years of financial consolidation should reflect in the real sectors of the economy.
“One would have expected that as government is practicing fiscal consolidation for two years now and as government budget deficit is narrowing, then it means that we are not expected to be borrowing to[help] bring our debt stock down and reduce interest rates significantly,” he said.
He stated that with the rate at which the public debt is growing, macroeconomic indicators such as interest rates will always be high, affecting the growth of businesses.
BoG data on debt
Financial data released by the Bank of Ghana revealed that although the country’s total debt has increased from 100.2 billion cedis to 109.8 billion cedis between 2015 and July 2016.
The total debt to GDP ratio has however declined from 71.6 percent at the end of December 2015 to 65.9 percent at the end of July this year.
The debt stock represents a debt to GDP growth from 60.6 percent to 65.9 percent between the six month period.
Although the external component of the debts decreased from 60.7 billion cedis to 60.6 billion cedis between the six month period, the domestic component of the country’s debt increased from 40.4 to 49.2 billion cedis from January to June.