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Country <strong>Debt</strong> <strong>Guide</strong><br />
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ghana<br />
However, the fiscal deficit has almost doubled since 2017 to 7.3% of GDP in 2019. This is partly driven by low tax<br />
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raising in Ghana. Tax revenue stands at just 12.6% of GDP in 2018, below the African average of 17.2% recorded<br />
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a year earlier. Recognizing this shortfall, the Ghanaian government has introduced the “Ghana Beyond Aid”<br />
strategy to plug the fiscal deficit by improving tax compliance – including of informal businesses, reviewing tax<br />
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exemptions – many of which apply to foreign investors - and identifying new indirect service taxes.<br />
In 2019, the IMF assessed Ghana’s debt situation as sustainable because of good market access as well as the<br />
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country’s aforementioned commitment to macro-financial stability. Reinforcing this assessment is Ghana’s Fiscal<br />
Responsibility Act, which calls on the government to ensure the fiscal deficit does not exceed 5% of GDP.<br />
However, Parliament has suspended the implementation of the act for the 2020 financial year due to the ongoing<br />
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COVID-19 pandemic. The IMF forecasts Ghana’s fiscal deficit to increase to 16.4% in 2020, the highest rate<br />
amongst any country analysed for this report (NB: the AfDB assessment is different – Sudan is highest for that<br />
analysis).<br />
Ghana’s commitment to greater data transparency – reflected in the Rights to Information Law that was passed in<br />
2020 – has earnt it one of the highest scores in the <strong>Debt</strong> Transparency Index. A broad – although incomplete –<br />
range of fiscal and debt data is available on the Ministry of Finance website, whilst the country also produces a<br />
publicly available debt management strategy and is a signatory to the Open Government Partnership, publishing<br />
all government contracts for public access.<br />
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Chinese <strong>Debt</strong> Exposure<br />
Chinese credit has declined in importance in Ghana since 2011: Ghana’s debt to China halved to 8.2% of total<br />
external debt stocks as of 2017, with the World Bank and the private sector emerging as the country’s biggest<br />
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creditors. In addition to the aforementioned market financing initiatives, this is due to a decrease in the<br />
absolute stock of Chinese debt as the country’s loans to Ghana approach maturity. In practical terms, the largest<br />
Chinese-financed projects in Ghana were constructed in the late 2000s and early 2010s, including the Bui Dam<br />
(totalling $673 million) and a gas processing plant ($850 million), meaning Ghana is close to repaying the<br />
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associated loans.<br />
Figure 7: Breakdown of Ghana’s debt stocks
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