According to the International Monetary Fund (IMF), it is more important than ever for Ghana to balance its developmental spending needs against the country’s debt accumulation rate.
Ghana’s debt-to-GDP ratio surpassed the dreaded 70% mark in September 2020 and is forecast to reach 81.5 percent by the end of this year, according to IMF estimates.
According to the Bretton Woods institutions’ April 2021 Fiscal Monitor survey, the country’s debt situation will worsen further, with the debt-to-GDP ratio forecast to rise to 86.6 percent by 2025.
During the April 2021 Virtual Spring Meetings Regional Economic Outlook Press Briefing on Sub-Saharan Africa, Abebe Aemro Selassie, Director of the African Department at the IMF, stated that Ghana must ensure that the country’s debt sustainability does not spiral out of control.
“Our engagement on debt is in the form of Article IV policy discussions. We provide advice on the types of reforms that we believe Ghana requires to ensure long-term development success. It is now more critical than ever for Ghana to strike a healthy balance between the need to continue addressing its development spending needs while also ensuring that debt sustainability does not become unsustainable.”
“How to achieve this balance was something we discussed with the government. But, of course, it is ultimately up to the government to develop the required policies and make decisions,” he added.