President John Dramani Mahama says recent improvements in the strength of the Ghanaian cedi have significantly reduced the country’s total debt burden.
According to him, Ghana has cut its debt by nearly GHS150 billion over the past five months, largely due to the rebound of the cedi against major foreign currencies.
Speaking at the Annual Meetings in Abidjan on Tuesday, May 27, Mahama noted that fluctuations in the cedi’s value have historically played a major role in driving up Ghana’s public debt.
“One of the push factors for the debt is the value of the local currency. Our debt continued to multiply because the cedi continued to grow weaker and so you needed more cedis. Because our public debt is stated in cedis, the weaker the cedi becomes against foreign currencies, the higher it pushes up your debt,” Mahama said.
He explained that the depreciation of the cedi in previous years meant the government had to convert more local currency to settle debts denominated in dollars and other foreign currencies, leading to a ballooning of the total debt stock.
However, he credited recent policy measures for helping to stabilise the economy, adding that the current strengthening of the cedi is already yielding significant fiscal relief.
“Fortunately, some measures we put in place have recently begun to show results, and the cedi has been strengthening. So we’ve reduced our total debt over the last five months by almost GHS150 billion, which is very significant,” he stated.
Mahama expressed optimism that if this positive trend continues, Ghana could meet its debt sustainability target ahead of schedule.
“If that trajectory continues, the target of reaching 55% to 58% debt sustainability by 2028 will be reached by the end of this year. That means it gives us fiscal space to invest in the most productive sectors of the economy,” he added.
