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Aug 6, 2015

Ghana is not on debt meltdown like Greece – World Bank Economist

Ghana’s economy is in crisis with a total public debt of GH¢89.5 billion, that is 67.1 per cent of GDP. The external debt stands at GH¢53.8 billion and the domestic debt is GH¢35.7 billion, but the country is not on a debt meltdown like Greece, Santiago Herrela, the World Bank’s Lead Economist for Ghana has told journalists.

According to Herrera, Ghana unlike Greece acted on the problem earlier.

“Government is taking measures to tackle debt,” he said.

He noted that the government of Ghana is tackling the primary deficit which is the main driver of debt and has been able to bring it down from eight per cent to three per cent.

Herrela warned that while Ghana is doing well in dealing with its debts, government’s dependence on short term debts such as the 91-Day Treasury Bills will increase liquidity risks, because the government while trying to pay its debts within short periods is also paying wages.

He also said 30 per cent of the country’s GDP is amortization related to interest rate.

According to him, Ghana has high cost of debt and there is need for stabilization.

He therefore urged the government to replace short term debts with long term debts.