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Tues, June 21, 2009, Accra:- In the first 6 months of the National Democratic Congress government, the total debt stock of Ghana has shot up enormously. The Mills administration has added some US$1.3 billion to Ghana's total debt stock.
According to figures released today by the Bank of Ghana, Ghana's domestic debt which was GH¢4.8 billion (27.2 % of GDP) at the end of 2008, increased to GH¢5.3 billion (24.7% of GDP) at the end of June 2009.
External debt also increased from US$3.98bn (28.1% of GDP) at the end December 2008 to US$4.2bn (28.9% of GDP).
This means that by June 2009, the NDC has added half a billion Ghana cedis to the domestic debt and US$380 million to our external debt. Yet, that is not the full story today because of significant loan commitments with the Bretton Wood institutions, subsequently.
The figures provided by Dr Paul Acquah, BoG Governor on Tuesday puts Ghana’s total public debt stock at US$7,798.3 million (53.6% of GDP) at the end of June 2009.
This was before last week’s 3-year US$602.6 million IMF loan to support the government's economic program to tackle macroeconomic instability. Also missing on the first half of the year calculation was the entire US$535 million credit facility approved by the World Bank for Ghana on June 15, which only received parliamentary approval this month.
Also, Ghana’s gross international reserves position, which could cover two and half months of import in December 2008 was at the end of June 2009 US$1,705.22 million, representing a mere 1.49 months cover of imports of goods and services.
Even demand on bank loans have tightened, with the banks; portfolio of bad loans increasing as well.
Though the Monetary Policy Committee of the central bank acknowledges that “On the global front, we are beginning to see signs of stabilization and recovery,” and that the “anxiety of markets and policymakers is giving way to some kind of hope, greater confidence, and positive expectations, and cautious optimism about global recovery and restoration of financial stability,” it cannot said the same for the domestic economy.
Cement sales (an indicator of developments in construction) have decreased by about 28.5 percent in year on year terms. Tourist arrivals have gone down. Domestic VAT (indication of consumption levels) and industrial consumption of electricity have all recorded declines, according to the Governor of the BoG.
The MPC said Tuesday, “Domestically, the last six months have seen a considerable uncertainty,” adding, “The June survey shows further softening of business and consumer sentiments, along with mixed signals of inflation and exchange rate expectations.”
The MPC noted, “Unlike the April survey, businesses and consumers are less optimistic about the prospects of the economy, suggesting that both businesses and consumers have already factored in the slowdown in economic activity in forming expectations.”
As a sign of the low consumer activity, non-oil import slowed down significantly during the first half of the year. Non-oil imports amounted to US$3,422.74 million which represented a decline of 6.8 percent. This is in contrast with a growth of 39.8 percent over the same period last year.
The NDC has been saved from the kind of oil price pressures the NPP faced by this time last year. Oil import bill was estimated at US$449.61 million, compared with US$1,326.49 million for the same period of 2008, a significant annual decline of 66.1 percent.
With water levels recovering at the Akosombo Dam, this decline is explained by the impact of a significant change in the hydro/thermal mix in the generation of electricity in favour of hydro, as well as some demand contraction, and lower prices on the international market.
The average realized weekly price per barrel of the benchmark Brent crude oil increased by 37.4 percent from US$50.55 at the end of March 2009 to US$69.44 at the end of June 2009. The price of crude oil was US$65.06 per barrel as at July 20, 2009.
The total import bill for the first half of the year fell sharply as a result of the compression in oil imports. Total merchandised imports was US$3,872.35 million compared with US$5,000.87 million for the same period in 2008, a decline in year on year terms of 22.6 percent (compared with an annual growth of 43.9 percent for same period in 2008).
On the positive side, estimates indicate that total merchandise exports for the first half amounted to US$3,003.85 million (an increase of 5.6 percent). But, even this has slowed down drastically, compared with US$2,845.81 million for the same period 2008 (an increase of 32.8 percent on 2007).
Exports of cocoa beans was also up this half year by 16.6 percent at US$1,060.97 million.
Gold export was also up marginally by 1.2 percent, to US$1,213.85 million compared with US$1,199.16 million over the corresponding period of 2008.
Non-traditional exports are also up by 5.6 percent to US$610.65 million.
Real annual growth of credit to the private sector was 19.1 percent at the end of May 2009, a slowdown from 25.4 percent for December 2008 and 36.9 percent for May 2008.
“To summarise”, the Governor said, “the information available suggest that economic activity measured by the Composite Index of Economic Indicators is slowing down and GDP growth is moving to significantly below trend. The uncertainties associated with the possible fallout of the global financial crisis and volatility in the domestic economic environment seem to be dissipitating.”
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