By Elorm Desewu
The government’s major risk for 2020 is the continues increase in public debt stocks and debt sustainability in the medium term in view of deteriorating fiscal deficit which could worsen in the election year, Economy Times has learnt.
Additionally, the other risk outlook is the government’s financing operations on the domestic money market which is crowding-out the private sector, driving up interest rates and, therefore, increasing pressure on monetary policy implementation.
The stock of public debt rose to 60.3 percent of GDP which was GH¢208.6 billion, at the end of September 2019 compared with 56.8 percent of GDP (GH¢170.8 billion) at the end of September 2018.
Of the total debt stock, domestic debt was GH¢101.4 billion, of which GH¢11.2 billion (3.8 percent of GDP) represented bonds issued to support the financial sector clean-up, while external debt was GH¢107.2 billion, with a share of 51.4 percent in the total public debt.
The domestic credit is expected to grow to support economic growth and is projected to remain strong and positive in the medium-term outlook, driven by improvements in business confidence, expectations of increased production in the oil and gas and mining sectors, and the continued implementation of growth-oriented government flagship projects.
Results from the Bank of Ghana’s latest confidence surveys, conducted in October 2019, pointed to improved business sentiments. Business confidence has rebounded, due mainly to favourable company and industry prospects, positive growth outlook and declining lending rates. Consumer sentiments, on the other hand, remained broadly unchanged from the previous survey.
