Skip to main content

Focus on reducing debt to 60% of GDP – Deloitte Ghana to government


 Auditing and accounting firm, Deloitte Ghana, is urging the government to focus on reducing the total debt to Gross Domestic Product ratio to below 60% in the medium to long term.

This is considered the threshold for sustainable debt levels.

In its review of the 2023 Budget, it expressed worry about the rising domestic debt.

The government launched a Debt Exchange Programme on December 5, 2022 to restructure the country’s debt as a prerequisite for an International Monetary Fund programme. This is expected to affect the returns of pension and insurance funds.

Deloitte Ghana said whilst government has tended to focus more on the international capital market to raise borrowed funds, the domestic component of the public debt has also trended upwards.

It is important to note that the increasing domestic debt limits the amount of credit available to private businesses as banks tend to lend more to the government, which is considered much lower in terms of risk profile as compared to the private sector. This ultimately results in higher lending rates for private sector businesses to compensate for their higher default risk”, it explained.

To address this challenge, it urged the government to further reduce its reliance on the domestic debt market by pursuing innovative revenue generation policies whilst adopting effective measures to boost our foreign exchange reserves and stabilise exchange rates in a bid to reduce the external debt accumulation resulting from depreciation, adding, “commercial banks should also be incentivized to increase lending to the private sector”.

Debt Exchange Programme could reduce government interest expense

On the Debt Exchange Programme, it said its success will result in some cash retention for government as it would have primarily deferred the commitment to settle maturing investments within the short term.
Government may also, therefore, be able to channel the cash retained through this deferral to other planned initiatives intended to expand the productive capacity of the economy.

The new bonds will be set at annual coupon rates that are considerably lower than the previous coupon rates contracted. In addition, the new rates are set to be graduated
from 0% in 2023 to 5% in 2024 and further up to 10% from 2025 onwards.

This Deloitte Ghana said if successfully implemented under these terms, the Domestic Debt Exchange programme will result in reduction in interest expense for Government and
also lead to improved cash flows, particularly within the short to medium term.

Overall, it said this will contribute to moderating government expenditure and improving the budget deficit.

Labels:

Comments

Post a Comment

Popular posts from this blog

UK-Ghana Trade & Investment Summit: Trade Resource Centre to help businesses maximise UK-Ghana trade opportunities

 In a significant boost to UK-Ghana trade and investment relations, the UK-Ghana Chamber of Commerce (UKGCC), in partnership with the UK-Ghana Jobs and Economic Transformation (JET) Programme, has launched the UK-Ghana Trade Resource Centre, a practical market-access platform designed to help businesses identify opportunities, navigate export requirements and build commercial partnerships between Ghana and the United Kingdom. The UK and Ghana enjoy strong trade relations, with total bilateral trade reaching approximately £1.6 billion in the year to Q1 2026. Yet, despite this progress, significant untapped opportunities remain for businesses in both countries. The Trade Resource Centre has been established to help bridge information gaps, connect businesses with the right partners, and support firms to take greater advantage of opportunities under the UK-Ghana Trade Partnership Agreement. The launch formed one of the major outcomes of the UK-Ghana Trade & Investment Summit 2026,...
Post a Comment
Read more

NESCAFÉ Launches Real Vibes Text & Win Promo to Reward Coffee Consumers Across Ghana

 NESCAFÉ has launched the Real Vibes Text & Win Promo, an exciting consumer promotion designed to reward loyal coffee lovers and bring the brand’s My Coffee, My Vibe experience even closer to consumers across the country. Running from September to December, the promotion gives consumers the opportunity to enjoy their favourite NESCAFÉ coffee while standing a chance to win exciting prizes, including phones, motorcycles, airtime and the ultimate grand prize—an electric SUV. Speaking at the launch, Lily Ntim, Category Development Manager for NESCAFÉ, said the promotion reflects NESCAFÉ’s commitment to creating, rewarding and memorable experiences for consumers. “Today, we are excited to introduce the NESCAFÉ Real Vibes Text & Win Promo, a campaign designed to bring the My Coffee, My Vibe experience even closer to our consumers,” she said. She added that the campaign is not only about prizes, but also about celebrating the everyday moments consumers enjoy with their coffee. “T...
Post a Comment
Read more

Ghana Home Loans

With interest rates declining, a more liquid environment and a macroeconomic stability, mortgage financing is expected to see an ease of credit. And Ghana Home Loans being a leader in this industry is expected to lead the way. Ghana Home Loans (GHL), a leader in home mortgage, continues to be the frontier in fulfilling dreams of many Ghanaians in homeownership. Since starting business in 2006, it has also provided many existing homeowners with Equity Release mortgages to support their businesses, pay educational fees, improve their properties, or simply pursue other personal hobbies and interests. Ghana Home Loans is a mortgage finance institution which operates under Bank of Ghana’s supervision as a non-bank financial institution. At present, the Company remains the only such institution that focuses exclusively on the provision of mortgage product. Through the Home Completion mortgage and Home Construction mortgage products, Ghana Home Loans has enabled many qualified applican...
16 comments
Read more