Ghana’s public debt decreases to GH¢761bn from GH¢807.8bn
Ghana’s Public Debt Declines as Monetary Policy Focuses on Inflation Stability
As of October 2024, Ghana’s public debt has reduced significantly to GH¢761 billion, down from GH¢807.8 billion in September 2024, marking a reduction of GH¢46.8 billion. This figure now represents 74.6% of the country’s Gross Domestic Product (GDP). In dollar terms, the debt stands at US$46.8 billion, a notable decline from US$51 billion the previous month. These figures, released in the Bank of Ghana’s November 2024 Summary of Economic and Financial Data, reflect ongoing government efforts to manage the nation’s debt amidst persistent economic challenges.
Monetary Policy Committee Holds Policy Rate Steady
The Monetary Policy Committee (MPC) of the Bank of Ghana has decided to maintain the policy rate at 27%, following a reduction from 29% in September 2024. This decision aims to stabilize inflation expectations and mitigate exchange rate volatility. The committee reached this decision after assessing the nation’s economic conditions, particularly the rising inflationary pressures.
The MPC highlighted that inflation remains elevated, largely due to unstable food prices, fuel costs, utility tariff adjustments, and residual exchange rate pressures from earlier in the year. These factors have altered the inflation trajectory, hindering progress toward disinflation.
Exchange Rate and Inflation Dynamics
The Ghanaian cedi, which had faced significant depreciation earlier in the year, is showing signs of recovery. The MPC attributes this rebound to reduced election-related uncertainties and bolstered foreign exchange reserves. However, inflation for October 2024 increased slightly to 22.1%, up from 21.5% in September. This rise is attributed to both food and non-food price increases.
The committee noted that average inflation forecasts for the next year have risen from 19% to 20.1%. Consequently, the horizon for achieving the inflation target band of 6-10% has shifted to the fourth quarter of 2025, a delay from the previously projected third quarter of 2025.
Challenges to Inflation Target
The government has set a year-end inflation target of 15%. However, with just one month remaining, elevated risks, including ongoing currency volatility and inflationary pressures, pose challenges to achieving this goal. The MPC emphasized the importance of strengthening the cedi and aligning monetary policies with Ghana’s ongoing IMF program to stabilize inflation expectations and foster long-term economic resilience.
This dual focus on reducing public debt and managing inflation underscores the government’s efforts to balance fiscal responsibility with economic stability amid external and domestic pressures.
