The Ministry of Finance has explained that the increasing cost of servicing the national debt in recent times is due to the shock brought about by Covid-19 pandemic, which has caused revenues to fall substantially.
It said though the pandemic has dragged revenue down, debt service cost, which refers to payment of due portions of loans and the interest, remained high, resulting in a higher ratio when debt service cost was compared with total revenue.
The ministry’s response followed analysis that showed that the ratio of debt service cost to total revenue and grants rose to 89.1 percent in June this year.
The country’s debt stock currently stands at 258 point four billion.
The Ministry of Finance plans to reduce that to 71.6 percent. In a response to Daily Graphic inquiries on the debt situation and its impact on the economy, a Deputy Minister of Finance, Charles Adu Boahen, outlined series of measures the ministry is pursuing to help bring the cost down.
These include the use of low-cost debts to retire comparatively costly ones, the development of robust domestic debt market to create space for low-cost debts, and an increased resort to bilateral and multilateral sources for loans.
