IMF Gives Lying BOG Reality Check: Debt To GDP Ratio Is 84.6% Not 80.1%

The International Monetary Fund (IMF) has calculated Ghana’s debt to GDP ratio at a heart-sinking 84.6%, instead of the 80.1% that the Bank of Ghana is claiming.

In its April 2022 Fiscal Monitor report, the IMF pegged the country’s total debt at 81.8% of GDP in 2021, higher than the 80.1%, approximately GH¢351.8 billion quoted by the Bank of Ghana.

The Fund also said the country’s debt-to-GDP ratio will increase from 2022 to 88.4% in 2026, before falling to 87.4% in 2027.

However, prior to that, it will record relatively the same debt-to-GDP ratio of 84% in 2022 and 2023 and later surge to 85% and 86% in 2024 and 2025 respectively.

The Fund is also projecting Ghana’s tax revenue to GDP ratio to increase in 2022 to 16.5%, from 14.7% in 2021.

The IMF’s calculation presents a reality check to the Akufo-Addo government which has been consistently underquoting the debt to GDP ratio to somewhat mollify the ugly truth that the country’s economy has been hamstrung by a debt conundrum.

And doing so, the government also hopes to hide the plain truth that the country’s economic woes, including high inflation and the fact that the cedi is the second worst-performing currency in the world, is as a result of irresponsible borrowing by the Akufo-Addo government.

Such camouflage then creates the opportunity to deceive the public that the economic problems are a result of COVID-19 and the Russia/Ukraine war.

When Akufo-Addo became president in 2017, Ghana’s debt was Ghc120 billion and this was a legacy debt – meaning it was debt that had piled on from the first government of Kwame Nkrumah to the government of John Mahama.

As of December 2021, the Akufo-Addo government had taken the debt to GH¢351.8 billion. And in December 2021 alone, a whopping 730 million in fresh loans had been taken by the government.

According to the Bank of Ghana, the domestic component of the debt went up to ¢181.8 billion in December 2021, from GH¢179.4 billion in November 2021. Then, the external component of the total public debt shot up to US$28.3 billion (¢170.0 billion), from US$27.9 billion in November 2021. It however remained unchanged between October 2021 and November 2021.

The Akufo Addo administration has been the least in investing in social infrastructure and capital investment, prompting critics to wonder what all the huge debt was used for.

The government’s accounting is so shabby, that over COVID-19, the President, Finance Minister and Vice President have all given different figures as what was spent to combat the pandemic.

Because of the country’s huge debt, investors do not trust that Ghana can pay back its loans and therefore are refusing to lend further to the country. This has led to a shortage in foreign exchange with attendant effect on inflation and depreciation of the cedi.