Is the Bank of Ghana Having a Laugh, or Relative Public Debt Just Shrunk by 15%?

Magical_Public_Sector_Debt_Drop_2017-2018I see that some officials of the Ghanaian government are in a celebratory mood. And who wouldn’t be? If the relative size of public debt has shrunk by nearly 15%, it sure is cause for celebration.

So I went over to the Bank of Ghana (BOG) source document to try and understand more. Only to meet confusion. The way officialdom in Ghana like to present public statistics can be a tad annoying. With no explanation for gaps in the data etc. etc. Private citizens who take an interest in public affairs are easily frustrated by this lack of annotation and poor referencing. But I trudged on.

First the total public debt numbers:

GHS 145 Billion – March 2018

GHS 142.5 Billion – December 2017

That was easy. All that was needed further then were the provisional GDP number for 2017 so that we could see the base from which the 2018 GDP estimate was being projected from. All of a sudden, trouble (see page 2 of the latest BOG summary of macroeconomic data).

According to the document, the second half of 2017 saw total GDP output of GHS 111.468 Billion (to keep things simple, all measurements are in current prices). If the outturn of the first quarter of 2017 is added, the figure becomes GHS 158.108 Billion. But where is the 2nd quarter GDP number? It couldn’t be found. I went to the BOG’s own second quarter bulletin, fast-read it, but still couldn’t find the number. Surely, a headline figure like that shouldn’t be buried under dense text!

I had to go look for the Statistical service bulletin for the second quarter of 2017. I discovered that there had been a revision of the provisional GDP figure from GHS 45.3 Billion to GHS 40.783.2 Billion for the period.

What the BOG summary does say unambiguously though is indeed that total public debt as a percentage of GDP in January of 2018 dropped to 59.5% and rose slightly to 60% in February 2018, having hit 69.8% in December 2017. I rubbed my eyes and read again. What current projected annual GDP figure is being used though?

From the calculation of private sector credit as a percentage of GDP on page 8, we can deduce that the Bank of Ghana’s estimate for GDP at current prices is GHS 241.5 Billion ($52 Billion).

If this estimate is correct then public debt as a percentage of GDP, based on the BOG’s own figures, should be 63% (i.e. $32.8 billion into $52 billion).

But based on the 2017 GDP figure of GHS 198.9 billion GHS ($45.02 billion, using the BOG’s own forex rate), computed from a mixture of GDP and Stat Service data, the economy would have to be growing by 20.7% per annum in nominal terms (to hit the projected figure of GHS 241.5 Billion) ) for public debt as a percentage of GDP to hit 63% (much less the 60% given in the document).

If it is assumed to be growing instead at 8% (and current GDP thus assumed to be about $46.36 billion), public debt as a percentage of GDP should be 70.7%.

With all this confusion, how can a public interest researcher, analyst or activist do her work of independent scrutiny of Government economic performance?

PS: This is the result of back of the envelope calculations done in half an hour, so very happy to be set straight so that I too can join the party.

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