Ghanaian Chartered Economist, Martin Ohene Anim, says Ghanaians must prepare to pay new or higher taxes to service the increased debt.
Ghana’s public debt has seen a significant increase of GH¢47.4 billion within the first two months of 2024, reaching a total of GH¢658.6 billion.
This accounts for 62.7% of the Gross Domestic Product (GDP) by February 2024. The external debt stands at GH₵380 billion, which is equivalent to 36.1% of the GDP.
These figures were reported by the Bank of Ghana in its May 2024 Summary of Economic and Financial Data.
In an interview with RGG News, Martin Ohene Anim said for the average Ghanaian, this means a higher cost of living as they might need to pay more in income tax, VAT, or other forms of taxation.
“These debts are accruing, and we are also in an election year so this means that there will be a huge budget deficit and the only group of people to suffer for it is the average Ghanaian. It means a higher cost of living as they might need to pay more in income tax, VAT, or other forms of taxation,” he said.
He said the country’s rising external debt will lead to increased demand for foreign currency for debt repayment and further depreciation of the cedi.
The situation he lamented always puts a strain on the government’s finances, as it will need to raise more revenue to repay the external debt.
“We are incurring more debt because the cedi is not performing well. If you convert your debt to the prevailing dollar rate, you should expect an increase in its value. This means that the moment the Cedi depreciates, you expect the value of most of the dollar denominated debts to increase,” he said.
According to him, to manage the debt, the government might need to borrow more, often at higher interest rates if lenders perceive Ghana as a higher-risk borrower due to its rising debt levels.
“Higher interest rates can trickle down to consumer loans, making it more expensive for Ghanaians to borrow money for personal needs such as mortgages, car loans, or business investments,” he added.
