The International Monetary Fund’s April 2023 Regional Outlook Report revealed that Ghana will spend about 45% of its non-subsidy revenues on interest payments in 2022.
This makes the country number one in sub-Saharan Africa.
The high interest payments are due to the country’s growing public debt, estimated at $575 billion or $44 billion as of November 2023.
The government stopped paying interest on some selected external debt, but the interest cost on domestic debt was very high.
Now, the interest payments due this year will depend on the successful restructuring of external debt with creditors (bilateral, multilateral and euro bond holders).
This may stop some interest payments or extend maturity.
The government announced in 2023 that it is a very serious debt problem leading to a debt restructuring programme.
Meanwhile, Malawi and Zambia have the highest interest payments in 2022, ranking second and third in Africa respectively.
They were expected to have spent about 37% and 31% of their earnings, excluding subsidies, on interest payments.
Sub-Saharan Africa’s public debt ratio of 56% of GDP has reached a staggering level
The IMF said sub-Saharan Africa’s public debt ratio will reach 56% of gross domestic product in 2022, reaching levels seen in the early 2000s.
“Since the pandemic, the increase in debt has been driven by widening fiscal deficits due to a combination of crises, slowing growth and depreciating exchange rates,” it added.
In addition, the IMF notes that rising public debt levels have raised concerns about debt sustainability, with 19 of the region’s 35 low-income countries already facing a debt crisis by 2022. said they were at high risk of facing a debt crisis. This is the October 2022 Regional Economic Outlook: Sub-Saharan Africa.
Government spent 33.61 billion cents on interest payments in 2021
In 2021, the government spent 33.61 billion cents on interest payments, according to the Bank of Ghana’s Monetary Policy Report.
According to the report, domestic interest payments accounted for 78.9% of total interest payments. However, gross interest payments accounted for about 50.4% of domestic revenue.
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