Ghana’s public debt decreases to GH₵761 billion (74.6% GDP), but fiscal deficit widens; robust reforms needed for sustained stability.
– BoG Economic Financial Summary
The Bank of Ghana’s (BoG) latest economic data shows a notable decline in Ghana’s public debt, which stood at GH₵ 761 billion at the end of October 2024, down from GH₵ 807.8 billion in September, representing 74.6% of GDP, reflecting the government’s efforts to manage fiscal pressures.
The country’s domestic debt reached GH₵ 307.3 billion, constituting 30.1% of GDP. Meanwhile, external debt was recorded at GH₵ 453.7 billion, accounting for 44.5% of GDP. The figures signal the importance of addressing external vulnerabilities, particularly amid currency depreciation that has significantly impacted debt servicing costs.
On the fiscal front, total revenue and grants remained subdued at 8.8% of GDP by the end of October. Domestic revenue contributed the bulk, reaching 8.7% of GDP, while tax revenues amounted to 7.1%.
Despite the government’s revenue mobilization efforts, expenditure pressures persist. Total government spending climbed to 12.6% of GDP, driven by recurrent expenditure, which continues to outpace capital investments.
The overall fiscal deficit widened to 3.9% of GDP in October, up from 3.5% in September. The primary balance also remained negative at –1.8% of GDP, indicating the government’s struggle to meet its fiscal consolidation targets. Net domestic financing increased to 2.4% of GDP, highlighting the reliance on domestic markets to bridge funding gaps.
The decline in public debt however provides a glimmer of hope for fiscal stability, but sustaining this trend will require robust revenue-enhancing measures and disciplined spending, requiring the need for structural reforms to improve tax collection and streamline public expenditure.
Additionally, strategies to manage external debt exposure, including refinancing and optimizing export earnings, will be critical in maintaining economic stability.
There also is the need for government to strike a balance between economic growth and debt sustainability. The fiscal policy of the government will be pivotal in shaping the trajectory of the economy in 2025.
