Ghana’s debt stock now stands at GHC173.1 Billion-Finance Minister
Ghana’s public stock in nominal terms, stood at GH¢173.1 billion or US$35.9 billion at the end of 2018, the Finance Minister, Ken Ofori-Atta has disclosed.
This was made up of GH¢86.2 billion or US$17.9 billion of external debt and GH¢86.9 billion or US$18.0 billion of domestic debt, he noted.
He disclosed this when he presented the mid-year budget review in parliament on Monday.
The Minister indicated that in 2018 implemented a liability management programme focusing on actively managing the public debt portfolio and minimising refinancing risk in line with the approved debt strategy. Leveraging on an improved macroeconomic environment, Government earmarked a total amount of US$1.25 billion from the proceeds of the 2018 Eurobond of US$2.0 billion for its liability management programme as follows:
• US$830.0 million was used to buy-back part of the 2022 Eurobond. This
was also the largest liability management exercised by Ghana to date;
• Buybacks totalling GH¢309.0 million (US$64.1 million) were conducted to help smoothen the maturity profile of public domestic debt and to reduce refinancing risk; and
• The maturing 2-year domestic US Dollar-denominated bond of US$94.6 million was fully redeemed.
65. Mr. Speaker, Government also spent GH¢300 million to generate liquidity on the secondary market by buying back some domestic bonds. Consequently, the tenor of the domestic debt was extended to the longer end with an amount of GH¢4.2 billion.
Mr. Speaker, in spite of the progress made to contain inflationary pressures over the past 24 months, headline inflation rose gradually from 9.0 percent in January to 9.5 percent in April, reflecting pass-through effects of the currency depreciation during the period. Inflation, however, declined gradually to 9.4 percent in May and further to 9.1 percent in June 2019. Interest rates
70. In line with the disinflation process, the Bank of Ghana Policy Rate was further reduced by 100 basis points to 16.0 percent in January 2019 and has since remained unchanged. Over the first half year, the 91-day Treasury bill rate rose to 14.8 percent in June 2019 from 14.6 percent in December 2018. Similarly, the rate on the 182-day bills also increased to 15.2 percent from
15.0 percent for the comparative period.
On the banking sector, he said the recapitalization exercise undertaken by Bank of Ghana, which sought to increase the stated minimum capital of banks from GHȼ120 million to GHȼ400 million, ended in December 2018, with a total of 23 banks meeting the requirement. Following the clean-up exercise, total assets of the banking sector increased by over 12 percent between June 2018 June 2019. Total deposits also increased by over 22 percent during this period.
72. With the rebound of the sector, banks are now poised to deploy their newlyinjected capital towards financial intermediation to aid the development process. Asset quality has also improved, as reflected in the declining NonPerforming Loans (NPL) ratio from 22.6 percent in June 2018 to 18.1 percent June 2019. There were also significant improvements in the banks’ profitability indicators.
Balance of Payments
73. Mr. Speaker, on the external front, provisional trade balance for the first half of 2019 show an improved trade surplus of 2.8 percent of GDP compared to a surplus of 1.9 percent of GDP in the first half of 2018. As a result, the current account recorded a marginal surplus in the first half of 2019, the first in recent times. Coupled with the with significant inflows recorded by the capital and financial accounts, the overall balance of payments yielded a surplus of 1.9 percent of GDP over the review period, compared with a deficit of 0.6 percent of GDP recorded during the same period last year.
The positive developments in the external sector contributed to significant improvements in the stock of gross international reserves to US$9.9 billion at end-March 2019, enough to pay for over 5 months of import of goods and services, before declining to 4.3 months import cover at the end of June 2019, largely on account of energy-related debt payments and higher repatriation obligations occasioned by domestic debt interest and coupon repayments to non-resident domestic debt holders.