Claim: Ghana’s ex-President and the 2024 Presidential candidate of the opposition National Democratic Congress (NDC), John Dramani Mahama, says the debt-to-GDP ratio of the country was 57% when he left office in 2016, but it is now “over 100%” as of Feb. 6, 2024.
Verdict: This is false. Data from the International Monetary Fund (IMF), International Development Association (IDA), Ministry of Finance, and the Parliament of Ghana showed the West African country’s debt to Gross Domestic Product (GDP) was above 72% in 2016 and not 57%. Also, the Bank of Ghana revealed in Jan. 2024 that the country’s debt-to-GDP ratio, as of Sept. 2023, was 66.4%.
Full Text
Former Ghanaian President John Dramani Mahama has defended his economic record between 2012 and 2016 as he campaigns to return to the country’s top job in 2024.
Speaking to a section of party supporters on Feb. 6, 2024, in Tamale in the Northern region of Ghana, the National Democratic Congress (NDC)’s flagbearer said he left office in 2016 when the country’s debt-to-GDP ratio was 57%.
“And let me put this to rest once and for all. They [government appointees] always talk about the mess John Mahama left us. The economic mess he left us. Let us go down a comparison lane. When I left office, the debt to GDP was 57%. Today [2024], the debt to GDP is more than 100%.
“It means if you take all Ghana’s GDP and turn it into money, you will use it to pay all our debts, and you will still owe 3%. Our debt-to-GDP was 57%, and the optimum GDP for middle-income countries that are recommended by the IMF is 60%, so we were even under the recommended debt to GDP,” the ex-Ghanaian leader said in a video shared on his Facebook page, starting from minutes 0:00 to 0:57.
Data from the social media platform showed the video had been watched 3,530 times and received 63 comments, 669 likes, and 93 shares.
Verification
The Gross Domestic Product is a measure of the health of a country’s economy. According to the IMF, the GDP is the measure of the monetary value of final goods and services.
The debt to GDP ratio is a metric that compares a country’s public debt to what it produces. The higher the ratio, the more difficult it is for the country to grow its economy. The debt-to-GDP ratio helps determine whether a particular country can repay its debts.
If a country’s debt to GDP ratio exceeds 77%, it is most likely the country will face stunted growth in its economy, the World Bank has established.
Contrary to the claim made by Mr Mahama, data from the International Monetary Fund (IMF), International Development Association (IDA), and the Parliament of Ghana showed Ghana’s debt-to-GDP ratio was above 72% in 2016 and not 57%.
The IMF, on page 2 of its Staff Report for the 2017 Article IV Consultation published on Aug. 1, 2017, said:
“While [the] central government’s public and publicly guaranteed external debt has stabilised somewhat as a share of GDP, total public debt has increased by 1 percentage point to 73.9 percent of GDP in 2016, around 3.5 percentage points higher than projected in the previous DSA.”
Also, in a report submitted by the Finance Committee of Ghana’s Parliament titled ‘Annual Debt Management Report for the 2016 Fiscal Year,’ the country’s legislature lamented the debt build-up by Mr Mahama’s government.
On page 2 of the report submitted on July 25, 2024, the Finance Committee noted that:
“Following the implementation of the Highly Indebted Poor Country (HIPC) initiative, which culminated in successfully reaching the completion point in 2006, Ghana significantly reduced her debt burden to about 26% of Gross Domestic Product (GDP).
Since then, the country has witnessed a significant build-up of debt, reaching 72.5% of GDP in 2016.”
Further checks with the country’s Finance Ministry showed the debt-to-GDP ratio in 2016 was 72.5% and not 57%.
On page 6 of his report to Ghana’s Parliament in 2017, the Finance Minister, Ken Ofori-Atta, told the lawmakers:
“As a percentage of GDP, the debt stock ratio increased from 72.2 per cent in 2015 to 72.5 per cent of GDP in 2016.”
In their article published in the International Journal of Innovative Research and Development published on Oct. 2018, the researchers said on page 201, that:
“In 2016, Ghana’s debt to GDP was about 73.4%.In real terms, Ghana’s total debt stock at the end of 2016 was GH¢122.6 billion. Ghana’s total GDP in 2016 amounted to about GH¢167.32 billion (US$42.69 billion).”
On page 8 of its Summary of Economic and Financial Data published in Jan. 2024, the Bank of Ghana revealed that the country’s debt-to-GDP ratio as of Sept. 2023 was 66.4%. The data from the central bank was a repeat of the figure it quoted for the Summary of Economic and Financial Data released in Nov. 2023.
However, Statista has shown Ghana’s debt-to-GDP in 2023 was 84.91%, which is 1.19% higher than the figure projected by the IMF in Jan. 2024. The Bretton Woods institution, in its 2023 Article IV Consultation Report on Ghana, launched a debt-to-GDP ratio of 86.1% for the country in 2023.
Conclusion
Reviewing the data published by the International Monetary Fund (IMF), International Development Association (IDA), Ministry of Finance, and the Parliament of Ghana, it is untrue that the West African country’s debt to GDP ratio in 2016 was 57%. The sources have disclosed that it was above 72%.
