As Ghana’s debt has risen to GH¢658.6 billion with every Ghanaian owing GH¢19,671, various indicators show the repulsive consequences the debt stock has on Ghanaians.
Ghana’s public debt saw 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.
According to the data, Ghana’s debt was GH¢611.2 billion at the end of 2023, but it rose to GH¢626 billion in January 2024 and further increased to GH¢658.6 billion in February 2024.
The consequences of public debt on Ghanaian citizens are far-reaching and have significant impacts on their daily lives. Some of the effects include:
1.Higher Taxes: To service the debt, the government may increase taxes, which reduces citizens’ disposable income and affects their purchasing power.
2.Inflation: Excessive borrowing can lead to inflation, causing prices to rise and reducing the value of citizens’ money.
3.Reduced Government Spending: A significant portion of the budget goes towards debt servicing, leaving limited funds for essential public services like healthcare, education, and infrastructure development.
4. Increased Cost of Living: High interest rates and inflation resulting from public debt can lead to higher costs for basic necessities like food, housing, and transportation.
5. Reduced Economic Growth: Excessive debt can hinder economic growth, leading to reduced job opportunities and lower standards of living.
6. Dependence on Foreign Aid: Ghana may rely heavily on foreign aid and loans, compromising its economic sovereignty and independence.
7. Burden on Future Generations: The debt burden is passed on to future generations, limiting their economic prospects and potential for growth.
8. Reduced Social Services: Debt servicing prioritization may lead to reduced funding for social services like healthcare, education, and social welfare programs.
9. Increased Poverty: The consequences of public debt can exacerbate poverty, as citizens struggle to make ends meet amidst rising costs and reduced government support.
10. Political Instability: Severe public debt crises can lead to political instability, as citizens demand accountability and economic reform.
By Ishmael Awudi
