Government borrowing and debt management have been hot topics of discussion in Ghana, with accusations flying back and forth between political parties.
The Director of Research at the Danquah Institute, Dr Frank Bannor, recently shed some light on the issue by comparing the debt accumulation under the National Democratic Congress (NDC) and the New Patriotic Party (NPP) administrations.
Dr Bannor pointed out that the NDC government significantly increased Ghana’s debt stock during their time in power, with a growth rate of about 261.83% from 2009 to 2016. He emphasized that on average, the NDC added 32.75% debt to Ghana’s debt stock every year during that period. The public debt rose from $8.07 billion in 2008 to $29.2 billion by 2016, representing a more than threefold increase.
In contrast, Dr Bannor highlighted that the NPP administration has added about 10.68% to Ghana’s debt stock every year since taking office in 2017. He noted that the total public debt stock under the NPP has increased by about 74.79%, which is significantly lower than the growth rate seen under the NDC.
Furthermore, Dr Bannor emphasized the importance of managing foreign currency debt, as it carries an exchange rate risk that could result in the debt stock rising even without new borrowings. He also highlighted the stability and widespread usage of the US dollar in international trade, making it a key currency for analysis.
With ongoing debates about government borrowing and debt levels in Ghana, Dr Bannor’s insights provide valuable context for understanding the country’s debt situation. It remains to be seen how the current administration will manage and address the debt challenges facing Ghana in the coming years.
