Ghana’s Debt at Highest in Four Years as Revenue Undershoots

ana’s government debt surged to the highest in at least four years as the West African nation tries to plug a budget gap that’s higher than projected.

Total debt was at $38.9 billion at the end of March, up 16% from a year earlier and the highest since at least March 2015, when the central bank started publishing these numbers in dollars. As a percentage of gross domestic product, debt rose to 58% in the month compared to 50% a year ago. More than half of that is external loans.

Ghana’s government debt has increased to the highest in at least four years

The figures were published as Governor Ernest Addison warned that the nation missed its first-quarter revenue target by almost a fifth, resulting in a higher-than-projected budget shortfall.

While legislation capping the budget deficit to 5% of GDP came into effect last year, Ghana has a track record of missing the fiscal target by wide margins in election years. The country, which will have the fastest-growing economy in the world this year, according to the International Monetary Fund, will have a presidential and parliamentary ballot in December 2020.

“My main concern is that the pace of revenue growth has lagged increasing debt-service cost,” Gregory Smith, a London-based fixed-income strategist at Renaissance Capital Ltd., said by phone. “We’re concerned that fiscal slippages including payment arrears may return as we build up to 2020 election.”