Ghana’s economy is rebounding, GDP growth rate now 5.4% – Finance Ministry

Provisional real GDP growth rate for 2021 showed a positive outturn of 5.4%, BoG

Ghana’s public debt now stands at 76.6% of GDP

The Finance Ministry has indicated that Ghana’s current GDP growth rate of 5.4% is an indication that the economy is rebounding after the COVID-19 pandemic.

Provisional real GDP growth rate for 2021 increased from 4.4% to 5.4% showing a positive outturn from the projected outturn by 1 percentage point.

The Sub-Saharan average growth rate also increased by 0.9 percentage points.

The economy also experienced an expansion of 0.5% in 2020.

The Ministry in a statement said, “these developments are positive and confirm the fact that the economy is rebounding post-COVID-19, the rate of debt accumulation is tapering off, and there is a slowdown in fiscal expansion with Ghana on track to return to the Fiscal Responsibility Act deficit threshold of 5% of GDP by 2024.”

Non-oil real GDP expanded from 1.0% in 2020 to 6.9% in 2021 (the highest non-oil real GDP growth rate since the rebasing was done in 2013) exceeding the target of 5.9% for the period.

The nominal GDP for 2021 is estimated at GH¢459.130 billion, over GH¢18 billion more than the projected outturn of GH¢440.869 million for the period. In 2020, the outturn was GH¢391.940 billion.

The Finance Ministry however explains that the increase in the projected GDP means all economic indicators expressed as a ratio of GDP will change to reflect the updated GDP data.

“These ratios include the debt to GDP ratio, a key factor in determining debt sustainability, the fiscal deficit to GDP ratio, and revenue to GDP ratio. The new GDP data also has implications for the nominal 2022 GDP target and the growth rate as it is based on the 2021 GDP data which have now been updated.”

“The fiscal deficit (including energy and Finsec payments) is now showing a decline (as a percent of GDP) from 15.0% to 14.7% of GDP for 2020. Similarly, the fiscal deficit of 2021 has reduced from 11.7% to 11.4”, it further said.

Also, Ghana’s public debt stock expressed as a percentage of GDP now stands at 76.6% of GDP at the end of 2021 compared to the earlier reported 80.1%.

Similarly, the 2020 debt stock has also reduced from 76.1% to 74.4%, which emphasizes that the country’s rate of debt accumulation has reduced to pre-pandemic levels.

The Finance Ministry notes however that the debt sustainability analysis (DSA) will be revised as well as GDP projections for 2022 to reflect the positive developments in 2021 as well as recent policy decisions which have a bearing on sustaining the momentum toward robust economic growth.