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March 11, 2016
Budget shows 44 per cent decline in
public debt
Accra, Nov. 16, GNA - The government's budget statement for
the year 2006/2007 indicated that total public debt,
domestic and external, had declined by a margin of 44.3 per
cent from US$8.4 billion in 2005 to US$4.8 billion at
September 2006.
Mr. Kwadwo Baah Wiredu, Minister of Finance and Economic
Planning attributed the "phenomenal" decline to the stock of
debt cancellations that the country benefited from under the
HIPC and the Multilateral Debt Relief Initiative (MDRI),
when he presented the 2006/2007-budget statement to
Parliament on Thursday.
"The phenomenal decline is the result of the stock of debt
cancellation that Ghana benefited under both the HIPC and
the MDRI debt relief Initiative," he said.
Mr. Baah-Wiredu said prior to MDRI in 2005, government's
total external debt alone, comprising of government overseas
debts, government-guaranteed debts and debts owed by
institutions with over 50 per cent government shares was
over six billion dollars, accounting for about 75.9 per cent
of the total public debt.
"This amount had been reduced significantly to US$2,143.79
million by the end of September 2006, as a result of a 66
per cent debt reduction under the MDRI," he said.
He said a large chunk of the external debt was owed to
multilateral credit institutions, 63.4 per cent, of which
the World Bank contributed about 44.3 per cent. Bilateral
debt constituted about US$610.49 million, representing 28.5
per cent of total external debt and the remaining US$174.1
million (8.1 per cent) ascribed to commercial debt.
The debt composition for the first nine months of 2006, he
said, was not any different from that of 2005.
Mr. Baah-Wiredu noted that the
domestic debt, owed to local banks and non-bank financial
institutions however, rose to 55.6 per cent of the total
public debt by the end of September 2006 in the post MDPI
period.
He said, "in terms of ratios, the net total public debt to
GDP declined from 32.0 per cent in 2005 and is expected to
be 28.2 per cent by end 2006."
Mr. Baah-Wiredu was confident that the trend in public debt
ratio was consistent with Government target to reduce the
debt burden and the rate of growth of public debt.
He however, told Parliament that based on the fiscal
performance for the first nine months of this year and the
projections that have been made for the end of the year, the
overall budget balance is projected to record a deficit of
¢5,591.8 billion.
He said, that was equivalent to 4.9 per cent of GDP compared
to the budget estimate of 4.5 per cent of GDP.
"The domestic primary balance is also projected to be a
deficit of 2.1 per cent of GDP against the budget estimate
of a deficit of 1.4 per cent of GDP. As a result, the main
fiscal anchor - domestic debt-to-GDP - is projected at 10.1
per cent against a target of 8.7 per cent for 2006," the
Minister told Parliament.
GNA
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