As COVID-19 hits Ghana economy, public debt rises to GH¢263b

The entire global economy has been hit by the coronavirus disease (COVID-19). While Ghana’s economy is beginning to experience some recovery, the Ghana Statistical Service (GSS) confirmed the full impact of the disease on the country. The latest data released by the GSS shows that real GDP contracted by 3.2 per cent in the second quarter of 2020, compared with a growth of 5.7 per cent for the corresponding period in 2019.

Non-oil GDP also contracted by 3.4 percent, relative to the 4.3 per cent growth in the same comparative period. The Industry and Services sectors have been most affected by the pandemic, contracting by 5.7 and 2.6 per cent respectively, it said.

The worst affected sub-sectors the GSS shows are; Hotels & Restaurants, Trade, and Manufacturing which contracted sharply by 79.4, 20.2, and 14.3 per cent respectively.

The country’s public debt has also risen to GH¢263 billion, according to the Bank of Ghana.

On September 28, 2020, the Bank said provisional data on budget execution for the first seven months, showed an overall budget deficit of 7.4 per cent of GDP, against the revised target of 7.2 per cent of GDP as the COVID-19 pandemic continued to impact fiscal operations.

The central bank said in a press release that the primary balance also recorded a deficit of 3.7 per cent of GDP, above the planned target of 3.4 per cent of GDP.

“Over the review period, total revenue and grants amounted to GH¢27.7 billion compared with the target of GH¢26.8 billion. Total expenditures and arrears clearance amounted to GH¢56.2 billion, above the target of GH¢53.3 billion,” it said.

“These developments,” the release said, “impacted the stock of public debt which rose to 68.3 per cent of GDP (GH¢263 billion) at the end of July 2020, compared with 62.4 per cent of GDP (GH¢218.2 billion) at the end of December 2019.

Of the total debt stock, domestic debt was GH¢125.1 billion (32.5 per cent of GDP) while external debt was GH¢138 billion (35.8 per cent of GDP), representing 52.4 per cent of the total public debt,”  it explained.

By Emmanuel K. Dogbevi