The alarming rise in debt has sparked debate among policymakers, economists, and the general public, with many pointing fingers at various factors contributing to this financial burden.
Dr Amin Adam, the Minister of Finance, has identified the depreciation of the Ghanaian cedi as a primary driver behind the ballooning debt.
According to him, the persistent depreciation of the cedi against major foreign currencies, especially the US dollar, has significantly increased the cost of servicing external debts, thereby contributing to the overall debt accumulation.
Sharing details of the economic performance during the monthly Economic Update at the Finance Ministry in Accra on Thursday, August 29, 2024, he explained that the increase in cedi terms and the decrease in US dollar terms are largely attributed to the depreciation of the cedi.
He said “As of July 31, 2024, Ghana’s provisional nominal central government debt stood at GH¢761.1 billion, equivalent to US$51.1 billion. This represents a nominal increase from the previous amount of GH¢587.7 billion, equivalent to US$53.5 billion.”
“The increase in cedi terms and decrease in US dollar terms is attributed to a combination of factors, including cedi depreciation, disbursements from multilateral institutions, and domestic financing of the budget,” he added.
The rising debt has sparked concerns about Ghana’s ability to sustain its financial obligations, with some analysts warning of potential repercussions if the trend is not reversed.
The International Monetary Fund (IMF) and other financial institutions have already flagged Ghana’s debt levels as unsustainable, urging the government to implement stringent fiscal measures to curtail the debt surge.
