The Effects Of Public Debt On Economic Growth Essay
Conventionally, even though there are other indicators, a good measure of the sustainability and accumulation of a country’s debt is to consider the debt level to the overall economic output of the country measured by the Gross Domestic Product (known as the Debt-to-GDP ratio).
Data released by the Bank of Ghana (BOG) recently showed that Ghana’s debt stock rose to GH¢ 97.2billion (or US$25.6billion) in December 2015, equivalent to 72.9% of GDP. Out of this, total external debt amounted to GH¢57.8billion (43.4% of GDP) and domestic debt was GH¢39.4billion (25.2% of GDP). That means; based on Ghana Statistical Service population projections, for every man, woman, and child living in Ghana owe about GH¢3,512.81 in government debt compared to GH¢872.99 as of 2011. As government runs budget deficits, mainly leading to the rise in the debt level; servicing the debt comes with severe consequences.
Notwithstanding the methodology, assumptions, and approach, the growing bulk…