Debt to GDP drops marginally to 65.9%

BY: Kester Aburam Korankye
Ken Ofori-Atta - Finance Minister
Ken Ofori-Atta - Finance Minister

The country’s debt to Gross Domestic Product (GPD) has decreased from 67.4 per cent in July 2017 to 65.9 per cent as of the end of July this year.

This is a result of the expansion in the economy during the year under review.

In spite of the percentage drop, the public debt in nominal terms went up from GH¢137.5 billion at the end of July 2017 to GH¢159.4 billion at the end of July 2018.

Out of the stated amount, domestic debt amounted to GH¢73.8 billion, representing 46.3 per cent of the total debt stock while external debt was GH¢85.5 billion, with a share of 54.7 per cent.

The Governor of the Bank of Ghana (BoG), Dr Ernest Addison, who announced this at a news conference after the 84th Monetary Policy Committee (MPC) of the central bank’s meeting in Accra yesterday, also said growth in the monetary aggregates generally slowed down in line with the disinflation process and financial sector restructuring in the country.

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“Broad money supply grew by 23.1 per cent year-on-year at end August 2018 to GH¢73.7 billion, compared with a growth of 24.9 per cent in the same period last year,” he said.

Explaining what triggered the growth, he said it was driven largely by increases in the net domestic assets of the banking sector.

Growth in reserve money

However, Dr Addison said there was an annual growth in reserve money which was 14.2 per cent in August, compared with 19.7 per cent in the same period last year, which was reflected in the decline in the commercial banks reserves with the central bank.

According to Dr Addison, who was presenting the MPC’s reviewed recent economic developments, economic activities had continued to strengthen, recording the highest growth in the last eight months.

“The bank’s real Composite Index of Economic Activities (CIEA) recorded an annual growth of 6.6 per cent in July 2018, the highest in eight months, compared to 2.1 per cent in the corresponding period of 2017,” he said.

Budget deficit on target

In relation to fiscal operations, Dr Addison said provisional data from January to June indicated that the overall budget deficit of 2.8 per cent of GDP was on target.

“Total revenue and grants amounted to about GH¢22.0 billion, equivalent to 9.1 per cent of GDP and below the programmed target of 9.5 per cent.

“Total expenditure, including arrears clearance, was GH¢27.9 billion, representing 11.5 per cent of GDP, which was also below the target of 12.1 per cent,” he said.

He, however, explained that the deficit was financed from both domestic and external sources and amounted to GH¢3.4 billion and GH¢3.7 billion, respectively.