Economist flags Ghana’s debt near 2021 levels

A development economist, Dr George Domfe, has expressed concern about Ghana’s rising public debt, warning that the country’s borrowing trend risks undermining recent gains made in debt sustainability.

Speaking on Business Breakfast on ZED 101.9 FM, Dr Domfe revealed that Ghana’s debt stock dropped to USD44 billion by the end of April, bringing the debt-to-GDP ratio below 50 per cent for the first time in over a decade.

“This marked the first time in over a decade that Ghana’s debt-to-GDP ratio dropped below 50 per cent, a welcome development, but the real concern was whether it could be sustained,” he said.

According to him, the gains were short-lived. By the end of July, Ghana’s debt had risen sharply to USD59.9 billion, almost the same level recorded in 2021.

He noted that this reversal will push the country’s debt-to-GDP ratio back up, a development the International Monetary Fund (IMF) is closely monitoring.

The development economist explained that while borrowing in itself is not inherently bad, the challenge lies in how effectively borrowed funds are utilised and the heavy cost of repayment.

“When you borrow one dollar, before you finish paying, you may end up paying five dollars because of the high interest rates, especially on Eurobonds. The problem is not the borrowing, but how we manage it. Borrowing should have a limit,” he stated.

Dr Domfe cautioned that borrowing must be done with restraint.

The development economist further criticised Ghana’s debt accumulation in recent years, arguing that the country borrowed excessively despite earlier opportunities to maintain fiscal stability.

He also called for prudent borrowing and effective use of funds to avoid worsening the country’s debt burden and straining future budgets.