The Government of Ghana is spending more on payment of salaries and interest on loans rather than on investments, the European Union (EU) Ambassador to Ghana, Diana Acconcia, has said.
This, she said has contributed to the rising public sector debt.
Speaking in an interview with TV3’s Alfred Ocansey on the Business Focus programme, Monday, February 1, she indicated that the current debt situation is high for a developing country like Ghana
However, she said it all depends on how the market reacts to it.
Ghana’s debt has hit 74% at the end of 2020, according to a recent economic and financial data released by the Bank of Ghana (BoG). The central bank put the country’s debt stock at GH¢286.9 billion
Asked for her views on the situation, Ambassador Acconia said “The figures are around 70 to 76 per cent of GDP, as you said it is indeed high for a developing country like Ghana.”
She further explained that whether or not the debt will be a problem depends on how the market reacts to the situation.
“The problem is how the market perceives Ghana’s debt,” she said, adding that “A few years ago, the International Monetary Fund was saying that Ghana is closed to the level of debt distress.
“On the other hand, investors are running to buy Eurobond from Ghana. I understand that the government wants to issue new Eurobond.
She added, “the problem is that a lot of the government expenditure goes to pay interests, salaries and not much of it into free fall productive investments.”