Government says it has successfully reduced Ghana’s debt-to-GDP ratio from 73 percent at the end of December 2016 to 68.3 percent as at September 2017.
Ken Ofori-Atta, Minister of Finance, who stated this in Parliament Wednesday, said Ghana’s debt to GDP ratio increased from 32 percent in 2008 to 73 percent by the end of 2016.
This, according to him, resulted in an increasing interest burden, with interest payments alone consuming 45 percent of tax revenue and 6.8 percent of GDP in 2016.
“The interest burden of Ghana’s debt has also been reduced. Interest payments have reduced from 45 percent of tax revenue to 43.8 percent in September 2017 with a projected 41.9 percent reduction at the end of 2017.
“Mr Speaker, it’s important to note that the annual average rate of debt accumulation of 36 percent over the last four years, has declined over the last nine months to about 13.58 percent. This is the lowest annual increase in the public debt over the last decade.”
He revealed that the current administration’s prudent debt management had improved the debt outlook and debt sustainability for Ghana.
“We will continue to keep the public debt in check and move purposefully away from the unbridled borrow and spend culture of the previous eight years.”
Energy sector levies
Mr Ofori-Atta said almost two-years into the implementation of the Energy Sector Levies Act, 2015 (Act 899), government was successfully executing mechanisms to streamline the operations of State-Owned Enterprises (SOEs) and make them financially viable.
“The ESLA has contributed to paying VRA and TORs debt owed to banks and trade creditors to the tune of GH¢1.9 billion. Government transferred an amount of GH¢484.3 million to partially settle foreign exchange under-recoveries owed the Bulk Oil Distribution Companies (BDCs), support the Strategic Stock Reserve Programme of Government, and to subsidise premix and residual fuel oil.
“Government also sponsored the issuance of Cedi-denominated medium-to-long-term bonds (7 and 10 year bonds) on the back of the ESLA receivables to facilitate the clearance of the sector’s legacy debts.”
He furthermore noted that government was determined to stop the mismangement of the energy sector in the past, which led to the accumulation of billions of debts by entities, such as BOST and manage the startegic entities with integrity and efficiency.
In addition to such debt clearance measures, he said government had embarked on a vigorous restructuring exercise to make the SOEs more viable.
By Samuel Boadi