Ghana’s public debt is set to hit 65.3 percent by year-end, according to an IMF forecast.
This figure that will mark the highest in a decade when the total public debt hit over 80 percent in the mid-2000s.
The latest IMF Fiscal Monitor report released Wednesday also projects the debt levels to peak at 71.1 percent in 2015, before easing to 68.3 percent two years later.
Commenting on Ghana’s debt level, Sanjeev Gupta, Deputy Director, Fiscal Affairs Department at the IMF said: “Given the debt levels, and given that there is pressure that is coming up within the system itself, it would be a good idea to consolidate sooner than later; and this would entail trying to restrain pressures on wages, containing the outlays on subsidies.
“Of course, while establishing appropriate targeted social safety nets. And also improving the quality of spending that is taking place, so that overall in the end there is an improvement in outcomes,” he added.
Government’s has recently sought an IMF programme to reduce public debt and improve its fiscal regime.
The IMF mission, which concluded its first round of discussions on a possible programme for Ghana, noted that the economy is vulnerable to many shocks — further stressing that the country’s economic growth at the end of this year will slide from the 7.1% recorded last year to 4.5%, which could be the lowest GDP growth in more than a decade.
Mr. Joël Toujas-Bernaté who led the IMF mission stated: “Ghana continues to face significant domestic and external vulnerabilities on the back of a large fiscal deficit, a slowdown in economic growth and rising inflation.
“These vulnerabilities are putting Ghana’s medium-term prospects at risk. The mission estimates growth to decelerate to 4½ percent in 2014 from 7.1 percent in 2013, and inflation to reach an average of around 15 percent for the year.”
Credit: B&FT Online
