The high debt rate has been attributed to sub Saharan's bid to tap international debt markets and issue record levels of debt in foreign currencies, as well as granting high yields to investors.According to the IMF's economic outlook report the rate of economic expansion is expected to rise to 3.4 per cent this year, up from 2.8 per cent in 2017. This the fund says will be boosted by global growth and higher commodity prices.The slow rate of growth in South Africa and Nigeria highly impacted the region-wide average, but the IMF expects growth to pick up in around two-thirds of African nations.
The Fund further says though refinancing debt could soon become more costly, around 40 percent of low-income countries in the region are now in debt distress or at high risk of it.
“The current growth spurt in advanced economies is expected to taper off, and the borrowing terms for the region’s frontier markets will likely become less favourable ... which could coincide with higher refinancing needs for many countries across the region,” it said.African governments issued a record $7.5 billion in sovereign bonds last year, 10 times more than in 2016. And they have issued or plan to issue over $11 billion in additional debt in the first half of 2018 alone, the report said.
Foreign currency debt increased by 40 percent from 2010-13 to 2017 and now accounts for about 60 percent of the region’s total public debt on average, IMF data showed. Average interest payments, meanwhile, increased from 4 percent of expenditures in 2013 to 12 percent in 2017.
Under President Akufo Addo, figures released by the Bank of Ghana (BoG) show that Ghana’s public debt reached 31 billion dollars as at December 2017, representing 69.8 percent of GDP. This is a reduction from the 73.3 percent recorded in December 2016.
The total debt stock in 2016 was at 27 billion dollars.
This means that the debt stock has almost hit the dreaded 70 percent of GDP, a point the International Monetary Fund (IMF) has constantly cautioned against.
The domestic component of debt as at December 2017 stood at 14 billion dollars, while the foreign debt stock was at 17 billion dollars.