In order to reach a manageable nominal debt-to-GDP ratio, the government would undertake policies including restricting concessional and non-concessional borrowing, according to Finance Minister Ken Ofori-Atta. This, in his opinion, would be crucial to lowering Ghana's debt levels and guaranteeing prompt debt service.
In order to achieve long-term debt sustainability, he also said that the medium-term fiscal framework will be based on structural reforms and fiscal adjustment.
Rising debt in Ghana has slowed to 393.4 billion dollars, or 78 percent of GDP.
The Finance Minister indicated recently that if Ghana's debt is to be reduced to levels that are manageable, an aggressive fiscal consolidation strategy would need to be hastened to assure the restoration of the primary balance to surplus territory in 2022. He claims that in June 2022, the government carried out a Debt Sustainability Analysis (DSA) to assess the solvency and liquidity of the overall public debt portfolio of the nation while taking into account the present and future debt service commitments.
He emphasised that "growing risks and vulnerabilities pose a threat to the outlook for Ghana's debt sustainability. Significant solvency and liquidity risks will arise in the medium to long term as a result of exogenous shocks from around the world, such as the Covid-19 pandemic's slow recovery, investor sentiment, exchange rate depreciation, high inflation, negative primary balances, and the crystallisation of contingent liabilities from the energy and financial sectors.
Up-to-date Credit Ratings for Ghana for 2022
The finance minister acknowledged the turbulence in the world's sovereign credit ratings. Although it was anticipated that the fiscal and balance of payments balances for the majority of emerging market economies would decline, there is still a need for fiscal stimulus while other external volatility endures.
Despite these trends, according to Mr. Ofori-Atta, there was confidence at the start of 2022 that these risks would diminish and that the performance of the fiscal and balance of payments accounts would recover to that of the pre-Covid-19 period.
The invasion of Ukraine by Russia, however, increased volatility and made it worse by increasing inflation and inflation expectations, expanding fiscal deficits, and worsening current account deficits for economies that rely heavily on imports.
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In order to reach a manageable nominal debt-to-GDP ratio, the government would undertake policies including restricting concessional and non-concessional borrowing, according to Finance Minister Ken Ofori-Atta. This, in his opinion, would be crucial to lowering Ghana's debt levels and guaranteeing prompt debt service.
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