Ghana’s debt stock shoots up by 20% within four months

The incorporation of short-term loans from the central bank to the state was a contributing factor that led to the five percent growth in Ghana’s public debt that occurred in only four short months.

According to information published on the website of the Bank of Ghana, the amount of public debt, which does not include the commitments of state-owned firms, increased to GH569.3 billion ($49.7 billion) at the end of April.

This number was revised to incorporate the overdraft that the central bank had extended to the government, which had been collateralized the previous year in December 2022.

Ghana’s debt stock shoots up by 20% within four months

According to the summary of economic and financial data provided by the central bank, the amount of debt owed as of the month of December increased to 473.2 billion cedis as a result of the adjustment, up from an earlier estimate of 434.6 billion cedis.

In April, the proportion of gross domestic product that was comprised of obligations was reduced to 71.1% from 77.5% in December.

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The majority of Ghana’s debt is being restructured as part of a programme with the International Monetary Fund that was approved in May and is worth a total of $3 billion. This comes after Ghana missed a payment on a Eurobond earlier this year.

In February, the nation finished the first phase of a domestic debt exchange. As part of this process, investors traded in 87.8 billion cedis worth of liabilities for new securities that paid as little as 8.35%, which was significantly lower than the old notes’ average interest rate of 19%.

The restructuring of $1.5 billion in domestic dollar bonds and cocoa bills began on July 14, putting investors in the position of facing decreased coupon rates.

In addition to the ongoing discussions with holders of bilateral and Eurobonds to restructure obligations, the nation is continuing conversations with local pension funds to restructure their combined 29 billion cedi worth of holdings in government bonds.

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Below are other macroeconomic and financial updates from the central bank:

  • External debt increased to 321.4 billion cedis at the end of April from 240.9 billion cedis in December
  • Domestic debt rose to 247.9 billion cedis from 232.3 billion cedis over the period
  • Budget deficit in the first five months of the year dropped to 1.8% of GDP from 4.2% a year ago
  • The primary balance improved to a deficit of 0.7% of GDP from 1.2% deficit
  • Total exports in the first half decreased to $8.2 billion from $8.9 billion y/y
  • Imports declined to $6.4 billion from $7.4 billion
  • Trade surplus widened to 2.4% of GDP from 2% of GDP
  • Gold exports climbed to $3.5 billion from $3 billion
  • Cocoa shipments rose to $1.5 billion from $1.4 billion
  • Oil shipments dropped to $1.7 billion from $2.8 billion
  • Other exports largely unchanged at $1.6 billion
  • The current account improved to a surplus of 1.1% of GDP from a deficit of 1.5%
  • Overall balance of payment also improved to 0.1% of GDP deficit from 3.4% deficit
  • Gross international reserves decreased to $5.3 billion at end-June from $7.7 billion y/y
  • Reserves were enough to cover 2.5 months of imports versus 3.4 months cover y/y
  • Banks’ annual loans growth slowed to 15.4% in June from 33.3% y/y
  • Non-performing loans rose to 18.7% in June from 14.1% a year ago
  • Capital adequacy ratio dropped to 14.3% from 19.4%
  • Monthly mobile-money transactions increased to 149.4 billion cedis in June from 77.4 billion cedis y/y
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