The Ministry of Finance has dismissed reports in some international media that government faces imminent external imbalances or reserves shortfall.

Bloomberg last week reported that Ghana faces grave financial challenges as investors get impatient with the country.

“The West African nation’s dollar bonds have slumped 10% in 10 days, moving deeper into distressed territory as investors judge that re-financing debt in the Eurobond market won’t be an option when the Federal Reserve hikes rates and budget targets remain elusive.

“The extra premium demanded on Ghana’s sovereign dollar debt jumped on Wednesday to an average 1,105 basis points, from 683 basis points in September,” the Bloomberg report said.

It added: “Its $27 billion of foreign debt had the worst start to the year among emerging markets, extending last year’s 14% loss, according to a Bloomberg index.

“Investors are questioning whether Ghana — the region’s second-biggest economy — can sustain its debt levels if a surge in borrowing costs shuts it out of international markets. Government debt climbed to 81.5% of gross domestic product at the end of last year, from 31.4% a decade ago, according to data compiled by Bloomberg”.

Reacting to the report, the Finance Ministry said: “There are some serious factual errors in the article, which may give investors some cause for concern, if not corrected. For example, Bloomberg stated 81.5% as of the end of year debt to GDP ratio. This is incorrect. Our provisional nominal debt to GDP, as of the end of November 2021 was 78.4%, which is the latest data available. December revenue collections are seasonally the largest for any year, it is unlikely that our financing requirements in December will result in us exceeding 80% debt to GDP by December 2021.


“The Bloomberg article gave wrong historical debt to GDP figures. It is essential we make the correction that Ghana’s debt to GDP figures a decade ago was 39.67% and 47.80% for 2011 and2012, respectively, and not 31.4% as stated in the Bloomberg publication. Again, it is important to note that for the period prior to the COVID-19 global pandemic, Ghana experienced an average debt-to-GDP ratio of 56.4% from 2015 to 2019. In 2020, Ghana’s GDP grew by 0.4% because of the impact of the Covid-19 Pandemic on the economy. Financing of the additional Covid-19 related expenditures, in addition to revised revenue targets, due to the impact of the pandemic, led to an increase in debt-to-GDP from 62.4% in 2019 to 76.1% in 2020″.

The statement further said: “The current 78.4% debt-to-GDP ratio as at the end of November 2021 indicates rather a reduction in the rate of debt accumulation (i.e. declined by half to 18% as at November 2021 from34% in 2020). This attests to an improvement in our debt and liability management, contrary to what the article seeks to suggest. Furthermore, with the positive Primary balance target for 2022 – one of the key fiscal anchors in 2022 – Ghana should see improved stability and reduction in the debt to GDP ratio in 2022 and through the medium term.5.It is most unfortunate to note that foreign investors and market participants are on edge following the impasse in Parliament, in relation to the passage of the E-levy Bill.

“The market seems to now be pricing into our bonds the perceived risks of having a slim majority in Parliament and the consequences thereof. The markets also seem to be concerned that this might impact the Government’s ability to successfully pass and implement some of its major revenue policy measures as presented in the 2022 Budget. The Ministry would like to state that a healthy debate in a vibrant Parliament is a critical part of Ghana’s growing democratic credentials and by no means should it be deemed to be a fiscal risk”.

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