Gov’t Debt Appetite Pushing Ghana to HIPC- World Bank Warns

Barely a day after the Akufo Addo-led administration successfully organised a US$ 3 billion Eurobond, World Bank has raised red flags about the government’s huge appetite for racking up debt.

The World Bank says the country’s public debt which grosses approximately US$ 214 billion and is about 64 per cent of Gross Domestic Product (GDP), would soon drive Ghana to join the league of highly indebted countries in what is popularly described as “HIPC” Ghana.

Speaking to the media after a courtesy call on the Speaker of Parliament, the Country Director of World Bank, Pierre Frank Laporte said though every country will have to borrow it must be cautious of the quantum of borrowing.

“Countries especially developing countries have to borrow because most of us do not have adequate resources, we have to borrow to develop but we have to borrow responsibly. At the moment, Ghana’s debt situation according to World Bank description is a country at a moderate rate to high risk of debt distress; of course, yes the country has to be careful”, said Mr. Laporte.

He added that : “I’m confident the Finance Minister and his team are fully aware of that, we discussed all the time and borrowing as I said is not always a bad thing but you must borrow at the right terms, as best as most favourable as possible and the right amount and the right way.”

Economists have questioned the rationale for borrowing mainly to be expended on consumption and recurrent expenditures rather than capital expenditures.

Ghana’s total public debt stock increased by GHS6.3 billion between September and November 2019 to reach GHS214.9 billion in November 2019. 

Of this total debt, the current administration of the New Patriotic Party (NPP) led by President Akufo Addo, had added a staggering GHC 102 billion within three years and still counting.

The bulk of Ghana’s debt are secured to pay off older debts, for instance, in 2019 alone, Ghana paid a whopping GHC19.756 billion to service debts. Of this amount, GHS4.60 billion was spent on the external debt while GHS15.156 billion was used to service loans contracted from the domestic market