New Bank of Ghana data shows that the country’s debt is now about 71 percent of the total value of the economy.
According to World Bank parameters, if a country’s debt-to-GDP ratio crosses the 70% debt mark, the country is classified HIPC.
Sources close to the Bank of Ghana are attributing the sharp increase in the public debt to the depreciation of the cedi and not necessarily due to increased government borrowing.
HIPC status means it would be difficult for that country to settle its debts on time.
Grim economic reports by the IMF indicate that Ghana’s current debt level is even higher than the period before the country was declared HIPC around 2001.
If the current public debt is shared among the citizenry, it could mean that every Ghanaian now owes about 3, 600 Ghana cedis.
Economist Dr. Eric Osei Assibey says the situation calls for some aggressive measures to check the country’s rising debts.
According to the economic and financial data from January to about August, there wasn’t encouraging news from the banking sector.
This is because deposits, total assets of commercial banks and credit extension declined sharply.
Total assets of the banks went down to 54 billion Ghana cedis from 58 billion cedis.
The IMF in June had predicted that the country could be HIPC by December 2015.
The international lending agency had already classified Ghana as high-risk, debt distress country.
A senior research fellow at the Institute of Statistical, Social and Economic Research (ISSER), Dr. Robert Osei also warned the economy may be retrogressing into a Highly Indebted Poor Country (HIPC) status.
Former Deputy Governor of the Bank of Ghana and NPP Vice-Presidential candidate Dr. Mahamudu Bawumia last March described Ghana as Highly Indebted Middle-Income Country (HIMIC).
“In fact, Ghana is right back to the debt unsustainability that led to HIPC. However, HIPC debt relief will not be available again”, he said at a lecture on the state of the economy.
But Deputy Finance Minister, Mona Quartey in June ruled out the possibility of Ghana going back to HIPC status.
According to her, government is showing “more discipline” in managing its debts and promised that very soon the rewards of such discipline would become apparent.
“We are not going to HIPC. We are going into a three-year IMF programme. We have been there [HIPIC] once and we are not going back there”, she told Joy Business.
"We move forward not backwards” she encouraged, saying Ghanaians should “declare and decree” positive confessions.