INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL MONETARY FUND GHANA Joint Bank-Fund Debt Sustainability Analysis – 2019 Update Prepared jointly by the staffs of the International Development Association (IDA) and the International Monetary Fund (IMF) Approved by Paloma Anos-Casero (IDA) and Dominique Desruelle (IMF) This debt sustainability analysis (DSA) concludes that Ghana’s risks of external and overall debt distress continue to be assessed as high.1 While the rebased nominal GDP significantly improved the public debt to-GDP ratios (albeit remaining elevated), the debt service ratios continue to breach their respective thresholds under the baseline, reflecting underlying vulnerabilities. The downward trend in total public debt-GDP ratio was interrupted in 2018, reflecting the realization of significant contingent liabilities in the banking sectors (seven banks resolved through end-December). At the same time, reflecting investor confidence in the first half of 2018 and efforts in restoring macroeconomic stability, Ghana successfully issued a US$2 billion Eurobond in May 2018 at more favorable terms relative to peer countries. Going forward, maintaining fiscal discipline, building buffers, diversifying the export base and exercising caution in contracting new external financing arrangements for infrastructure and other spending would be critical in making sure public debt dynamics be put firmly on a downward path. 1 This DSA was jointly prepared by International Monetary Fund (IMF) and World Bank staff under the new debt sustainability framework (DSF) for low-income countries (LICs), implemented since July 2018. The LIC DSA compares the evolution of debt-burden indicators against thresholds, which are pre-determined depending on the classification of debt-carrying capacity (weak, medium, and strong). The debt-carrying capacity is classified using the country-specific composite indicator (CI) composed of three macroeconomic indicators and the World Bank’s Country Policy and Institutional Assessment (CPIA). Ghana’s capacity is assessed as “medium” using the CI based on the October 2018 WEO. BACKGROUND Public Debt Coverage 1. The DSA focuses on the public and publicly guaranteed (PPG) debt of the central government. In addition to the standard PPG debt, the DSA also captures debt contracted independently by selected energy-sector state- Subsectors of the public sector Sub-sectors covered owned enterprise (SOEs), which 1 Central government X are not explicitly backed by 2 State and local government government guarantee and 3 Other elements in the general government deemed to be the most important 4 o/w: Social security fund for the assessment of public debt 5 o/w: Extra budgetary funds (EBFs) dynamics. 6 Guarantees (to other entities in the public and private sector, including to SOEs) X 7 Central bank (borrowed on behalf of the government) X 8 Non-guaranteed SOE debt X 2. Efforts to step up the government’s capacity to record and monitor public debt and contingent liabilities are underway. The Ministry of Finance (MoF) prepared borrowing policy guidelines to regulate loan acquisition for ministries, departments and agencies (MDAs) and SOEs, which will be published once consultations with stakeholders are completed. In 2018, the government also launched a new credit risk assessment framework to enhance the management of fiscal risk arising from issuance of guarantees and on-lent operations to public entities as articulated in the Medium-Term Debt Strategy (MTDS) for 2019-22. Technical Assistance (TA) by the World Bank and IMF will continue in 2019 and include efforts to enhance data coverage of SOEs in the subsequent DSAs.2 3. The magnitude of the shock of the contingent liability test applied in the context of the sensitivity analysis of this DSA reflects potential additional liabilities. They could emanate from other SOEs whose debts are not captured in the debt data coverage, public–private partnership agreement (PPP) and financial sector. Unanticipated bank resolution costs in 2018 and the 2017 issuance of the energy 1 The country's coverage of public debt The central government, central bank, government-guaranteed debt, non-guaranteed SOE debt Default Used for the analysis Reasons for deviations from the default settings 2 Other elements of the general government not captured in 1. 0 percent of GDP 0 3 SoE's debt (guaranteed and not guaranteed by the government) 1/ 2 percent of GDP 2 4 PPP 35 percent of PPP stock 1.44 5 Financial market (the default value of 5 percent of GDP is the minimum value) 5 percent of GDP 5 Total (2+3+4+5) (in percent of GDP) 8.4 1/ The default shock of 2% of GDP wil be triggered for countries whose government-guaranteed debt is not fully captured under the country's public debt definition (1.). If it is already included in the government debt (1.) and risks associated with SoE's debt not guaranteed by the government is assessed to be negligible, a country team may reduce this to 0%. 2 World Bank TA in 2019 will be produced through the Debt Management Facility (DMF), the Ghana Economic Management Strengthening (GEMS) Project, and the Ghana Government Debt and Risk Management (GDRM) Project. TA through the DMF will be largely demand-driven. Other programmed project activities include: stakeholder engagement on the new borrowing guidelines and operational manual; Government staff training to prepare Annual Borrowing Plans in context of the MTDS and DSA, including sensitivity analysis and reporting; finalize the operational risk management (ORM) framework; support activities on reporting and communication; and develop capacity building on international capital market operations. 2 bond highlight the risk posed by contingent liabilities. Total contingent liabilities for the CL test are estimated at 8.4 percent of GDP. Background on Debt 4. The downward trend in total public Ghana: Currency Composition of External Debt debt-GDP ratio was reversed in 2018 due to End-July Ghana: Currency 2018of External Debt Composition financial sector cleaning up costs unanticipated End-July 2018 during the last DSA. The fiscal performance 0.26 1.40 0.26 faced headwinds in 2018 due to weak revenue 6.11 collection (driven by lower VAT) and overruns 11.48 24.34 in spending (driven by goods and services). Nonetheless, 2018 fiscal targets were still met thanks to combined effect of the July Mid-Year 56.16 Budget Review measures, collection efforts in December and significant cuts in capital expenditures. However, including financial Special Drawing Rights (SDR) United States Dollar (USD) Euro (EUR) Great Britain Pound (GBP) sector cleaning up costs (Background Box 3), the Japanese Yen (YEN) Chinese Yuan Renminbi (CNY) primary deficit reached 1.4 percent of GDP Others compared a surplus of a 0.3 percent of GDP projected in the previous DSA. 5. Ghana has increasingly relied on non-concessional borrowing along with its consistent improvement in income status and has maintained more-sustained market access. As of July 2018, Ghana’s external public debt (excluding non-resident holdings of government securities) stood at US$18,211.8 or 28 percent of GDP. The borrowing comes mostly from multilateral creditors, bilateral creditors and international market. The main multilateral creditors are the African Development Bank (AfDB), International Development Agency (IDA) and IMF. Bilateral creditors are evenly spread across Paris and non-Paris club creditors. Over 50 percent of the external debt stock is denominated in US dollars. UNDERLYING ASSUMPTIONS AND COUNTRY CLASSIFICATION Background on Macro Forecasts 6. The updated macroeconomic projections assume a slightly lower short-to medium term growth trajectory compared to the April 2018 DSA and reflect the rebased nominal GDP, which increased 2017 nominal GDP by 25 percent (see table and box below). 7. While the authorities remain committed to contracting external loans in line with debt limits, other financing arrangements envisaged for 2019 pose potential risks to debt dynamics. They are within the 2018 debt limits for new non- concessional external borrowing priority projects set at US$3,500 million (cumulatively since end-Dec 2015). In 2018, the Parliament approved a financing arrangement with Sinohydro, a construction company, under which the latter will provide infrastructure worth US$2 billion to Ghana to be financed from Ghana’s refined bauxite export proceeds (see staff report Box 5). The arrangement is planned to be independent of the government and to be implemented by a commercial entity established by the Parliament. While the arrangement—still to become effective— 3 seems to have ring-fenced possible government obligations and therefore would not impact the DSA, it should still be designed and executed to ensure transparency and value for money. Since the project is classified as commercial debt, it is not included in the coverage of the DSA. Ghana: Macroeconomic Assumptions Comparison Table DSA April 2018 Current DSA 2017-22 2023-2037 2018-23 2024-2038 Real GDP (%) 6.0 4.7 5.7 4.2 Inflation (GDP, deflator, %) 9.0 6.3 8.7 8.2 Nominal GDP (Billions of GHc) 301 1040 434 1814 Revenue and grants (% of GDP) 17.6 16.7 15.6 15.5 Grants (% GDP) 0.2 0.0 0.2 0.0 Primary expenditure (% GDP) 16.3 16.2 14.9 14.6 Primary balance (% GDP) 1.3 0.5 0.7 0.9 Exports of G&S (% change) 6.7 6.0 5.8 5.0 Noninterest current account deficit (% GDP)- 1.1 1.0 0.4 0.9 Sources: Ghanaian authorities and IMF staff estimates and projections 4 Box 1. Baseline Macroeconomic Assumptions • Overall real GDP: growth is estimated to have moderated to 5.6 percent in 2018 (1 percentage lower than the previous DSA estimate), reflecting lower growth in oil and gas than projected in the previous DSA. It is however projected to increase to 8.8 percent in 2019 on the back of increased oil production. Oil production is currently expected to peak in 2023, with the possibility of new oil discoveries and gas production implying significant upside potential. Non-oil growth reached 5 percent in 2018 and is expected to increase to 6 percent in 2019 and onwards, reflecting government initiatives to close infrastructure gaps and improvements in the financial sector. Tackling structural impediments including power supply, infrastructure, and diversifying the non- commodity economy will be key to increasing potential GDP. • Inflation and exchange rate: After decreasing from 15.4 percent at end-2016 to 9.6 percent in April 2018, headline inflation has remained below, but stubbornly close to the 10 percent target upper-band, reaching 9.4 percent in December 2018. The end-period exchange rate came under pressure amid portfolio outflows but has since stabilized, depreciating by over 8 percent at end-December 2018 relative to end- December 2017. Going forward inflation is expected to stay within the BOG’s target band. • Government balance: The 2019 budget targets an overall fiscal balance, excluding financial sector costs, of 4 percent of GDP and primary balance, excluding financial sector costs, of 1.6 percent of GDP. But high financial sector costs (not originally envisaged in 2019 under the program) will result in a primary balance of 0 percent of GDP. Yet, after these one-off costs, the primary balance is projected to remain around 1.5 percent of GDP over the medium term, provided additional domestic revenues are mobilized. Total public GFNs are projected decline by about 2 percent of GDP in 2019 but will remain elevated. • Current account balance: The current account deficit narrowed to 3.2 percent of GDP in 2018 supported by oil exports. It is projected to further improve to 3 percent of GDP in 2019 reflecting sustained performance in the trade account supported by exports of key commodities. In the medium term, it would improve to an average of 3.2 percent of GDP; the non-interest current account will improve as well, reflecting maintenance of surpluses in the trade account. In line with the authorities’ plans, 2019 will see an accumulatio n of foreign exchange reserves to restore buffers lost in 2018. Gross international reserves would steadily increase to almost 3-months of imports coverage by 2022. • Financing flows: Mainly driven by the hydrocarbons sector, Ghana has enjoyed high FDI inflows in recent years, near 5½ percent of GDP in 2017. Looking forward, FDI is projected to decline gradually as oil production reaches its peak and eventually stays at around 4 percent of GDP over the long run. Consistent with Ghana’s improving income status and more-sustained market access, grant inflows are projected to decline to around 0.1 percent of GDP in the medium term. Borrowing is projected to become increasingly non-concessional (less than a 35 percent grant element), as loans are expected to be used for key infrastructure projects to raise the potential growth rate. Up to US$3 billion Eurobond issuance is planned for 2019, of which US$1 billion is meant for liability management. A series of Eurobond issuances is envisaged to roll over maturing Eurobonds, which are assumed to be repaid on an amortizing basis rather than as bullet payments. 8. The realism tools show that projections are in line with historical and peers’ experiences. • Fiscal adjustment: The size of the projected fiscal adjustment over the three-year period up to 2020 is 1.1 percent of GDP (including financial sector cleaning up costs); and lies within normal ranges (below the top quartile of the distribution of past fiscal adjustments of LICs that have requested IMF supported programs). • Fiscal adjustment-growth: In 2018, the difference between the expected fiscal impulse and the baseline can be explained by repairs and technology issues in key oil fields, which affected oil and gas production. However, in 2019, the baseline real GDP growth projection converges to the paths derived by using different typical multipliers in LICs. • Investment-growth: The levels of private investment/GDP and public investment/GDP significantly shifted upward following the GDP rebase exercise, reflecting new data sources and a comprehensive survey. In terms of trends, private investment is expected to stay more or less flat 5 throughout 2022 in line with the previous DSA, but public investment will pick up starting in 2019 in line with the government policy of stepping up infrastructure projects. Consequently, the contribution of government investment to real growth is projected to be higher in the projection period than in the previous DSA. • Debt drivers: for external PPG, debt dynamics in the projection period are mainly driven by current account deficit and FDI, the exchange rate, real GDP and nominal interest rates. Public debt dynamics will be driven by real growth and interest rates. • Forecast errors: historical forecast errors for both external and public debt are largely driven by residuals, reflecting materialization of contingent liabilities. While the macroeconomic framework aims to capture such risks to the extent possible, the materialization of further contingent liabilities remains a relevant downside risk to the baseline. Country Classification and Determination of Scenario Stress Tests: 9. Ghana is assessed to have a medium debt carrying capacity. Based on October 2018 WEO macroeconomic framework and the World Bank’s CPIA index, Ghana’s composite indicator score is 2.83 (above the lower cut-off value of 2.69 but below the strong capacity cut-off value of 3.05) confirming medium debt carrying capacity used in the April 2018 DSA under the old methodology. The new thresholds for a medium performer are therefore used below to assess external debt risk rating. Given Ghana’s economic characteristics, tailored stress tests for commodity prices market financing, and contingent liabilities are applied. (In percent) Old methodology New methodology Public debt ratio-to-GDP 56 55 PV of PPG external debt-to-GDP 40 40 PV of PPG external debt-to-XGS 150 180 Debt service of PPG external debt-to- 20 15 XGS Debt service of PPG external debt-to- 20 18 revenue Calculation of the CI Index Components Coefficients (A) 10-year average values CI Score components Contribution of (B) (A*B) = (C) components CPIA 0.385 3.550 1.37 48% Real growth rate (in percent) 2.719 5.490 0.15 5% Import coverage of reserves (in percent) 4.052 24.294 0.98 35% Import coverage of reserves^2 (in percent) -3.990 5.902 -0.24 -8% Remittances (in percent) 2.022 4.168 0.08 3% World economic growth (in percent) 13.520 3.583 0.48 17% CI Score 2.83 100% CI rating Medium 6 10. Contingent liabilities (CL) test is applied reflecting that SOEs and the financial sector represent a material risk to debt sustainability, as explained above. High levels of systemic losses and poor fee collection capacity in the utility sector could lead to fresh liabilities building up in the sector. While, the authorities have secured and set aside resources for the micro-finance sector resolution and are working on plans for resolution of the SDIs, risks from these sectors should be closely monitored. EXTERNAL DSA 11. The external debt indicators have significantly improved relative to the previous DSA on account of the rebased GDP, but vulnerabilities associated with debt service remain, figure 1 and table 3. Two out of four indicators are in breach the thresholds under the baseline.3 The debt service-to- exports ratio would be breached in the first 3 years; and then hovers around the threshold until 2022, breaches again from 2023 to 2026 beyond which it stays around the threshold. As in the past, debt service- to-revenue ratio is projected to stay above the threshold over the entire projection period. The outlook of this indicator would improve to the extent that the revenue mobilization measures are ramped up and through implementation of proactive debt management to further smoothen and lengthen the debt maturity profile. 12. The debt outlook remains sensitive to standard shocks under the DSA. The standard stress tests suggest that Ghana is particularly vulnerable to a decline in exports, confirming the need to diversify the economy and increase resilience to external shocks, see Figure 1 and Table 3. 13. Ghana’s gross financing needs have declined significantly over the past three years, but financing risks remain. This is flagged by the breach of benchmark for the market financing risk indicator of Ghana’s GFNs, albeit with a small margin. The latest EMBI spread is just below the benchmark of 570, although there was a temporary breach between mid-November 2018 and end-January 2019, (Figure 5). PUBLIC DSA 14. The public debt/GDP ratio improved following the GDP rebase. However, the downward trend in the debt/GDP was interrupted in 2018, reflecting the realization of significant contingent liabilities in the banking sectors). Under the baseline, all debt indicators are expected to improve and stabilize reflecting the expected fiscal consolidation and sustained growth. Nonetheless, total public debt-to-GDP ratio initially breaches the benchmark of 55 percent of GDP and would only decline below the benchmark by 2023, figure 2 and table 4.4 Over the medium term, debt service -to-revenue will also improve in the medium term, Table 2 and Figure 4. 15. Public debt sustainability is significantly vulnerable to commodity price shocks, with the PV of debt-to-GDP reaching 81 percent in 2028. On this basis, Ghana’s overall public debt risk is assessed to be high. 3 Under the new DSF, external debt indicators have been streamlined to only four indicators namely (i) PV of debt-to GDP ratio, (ii) PV of debt-to GDP ratio, (iii) Debt service-to-exports ratio and (iv) Debt service-to-revenue ratio. 4 As Ghana’s debt carrying capacity is rated as medium, the relevant public debt benchmark is 55 percent of GDP. 7 CONCLUSIONS 16. The authorities agreed with the DSA results and are taking steps to improve debt dynamics and secure debt sustainability. Going forward, they have committed to cap overall fiscal deficit at 5 percent of GDP and secure positive primary balance, in line with the fiscal responsibility law. In addition, the authorities have set their own annual limits for the new external borrowing for projects and budget financing in 2019, following the same approach used under the ECF program. 17. The overall risk rating of debt distress is assessed to be high. The external risk of debt distress is assessed to be high because of the breaches of two indicators (external debt service-to-exports and external debt service-to-revenue) and the overall risk of debt distress is high because of those breaches as well as the PV of debt of total public debt-to-GDP ratio breaching its benchmark. 18. Ghana’s public debt is deemed sustainable based on the authorities’ sustained commitment to fiscal consolidation, prudent borrowing and proactive debt management initiatives, guided by their MTDS and recently passed Fiscal Responsibility Law. The average maturity of domestic public debt has been significantly increased in recent years and the recent buyback of the 2022 Eurobond with proceeds from the 2018 Eurobond helped to ease near-term refinancing risks. Going forward, keeping the fiscal performance on track under the Fund supported program is essential for engineering a favorable debt dynamic and maintaining confidence among foreign investors. In addition, efforts to strengthen the oversight over SOEs will be instrumental to stem their financial losses and prevent further feedback-loops to the budget and public debt. While Ghana’s gross financing needs are declining, they will nonetheless remain high in the near term. Given the increasing presence of nonresidents in the domestic debt market, continued fiscal discipline and a strong macroeconomic environment are needed to continue attracting nonresident investors and anchor their confidence. A departure from the planned fiscal adjustment path could seriously jeopardize debt sustainability. Ghana should continue engaging with development partners to seek concessional financing and expedite disbursements under existing commitments from multilateral agencies. 8 Table 1. Ghana: External Debt Sustainability Framework, Baseline Scenario, 2015–38 (in percent of GDP, unless otherwise indicated) Actual Projections Average 8/ Historical Projections 2015 2016 2017 2018 2019 2020 2021 2022 2023 2028 2038 External debt (nominal) 1/ 41.4 41.9 41.5 42.7 44.7 42.5 40.3 38.4 37.4 34.4 25.6 31.0 38.5 Definition of external/domestic debt Residency-based of which: public and publicly guaranteed (PPG) 37.4 37.9 37.5 38.7 40.7 38.5 36.3 34.4 33.4 30.4 21.6 26.9 34.5 Is there a material difference between the Yes two criteria? Change in external debt 9.0 0.5 -0.4 1.2 2.0 -2.2 -2.2 -1.9 -0.9 -0.3 -1.3 Identified net debt-creating flows 1.8 -6.1 -5.5 -3.4 -5.6 -3.2 -3.1 -3.4 -2.5 -1.1 0.1 -1.3 -2.5 Non-interest current account deficit 3.2 2.4 0.3 0.8 0.2 0.4 0.4 0.3 0.4 1.1 1.4 5.1 0.6 Deficit in balance of goods and services 8.8 5.6 3.1 1.1 0.5 1.0 1.2 2.4 2.6 4.2 4.4 8.8 2.5 Exports 34.0 31.8 34.6 34.4 34.6 34.0 33.6 32.3 31.6 27.5 23.1 Imports 42.7 37.3 37.7 35.5 35.1 35.0 34.8 34.7 34.2 31.7 27.4 Debt Accumulation 4.5 4 Net current transfers (negative = inflow) -5.3 -2.6 -4.2 -4.0 -3.9 -3.7 -3.5 -4.2 -4.0 -3.1 -1.9 -4.5 -3.7 of which: official -0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.0 4 Other current account flows (negative = net inflow) -0.3 -0.5 1.4 3.6 3.5 3.1 2.7 2.1 1.8 0.0 -1.1 0.9 1.8 3.5 Net FDI (negative = inflow) -6.1 -6.3 -5.5 -4.5 -5.0 -4.2 -4.7 -4.9 -3.8 -2.7 -1.8 -6.0 -3.8 3 Endogenous debt dynamics 2/ 4.7 -2.2 -0.3 0.3 -0.8 0.6 1.2 1.2 0.9 0.5 0.4 3.0 Contribution from nominal interest rate 2.6 2.8 3.1 2.4 2.8 3.0 3.0 2.8 2.6 1.9 1.5 3 Contribution from real GDP growth -0.8 -1.3 -3.2 -2.1 -3.6 -2.5 -1.8 -1.7 -1.8 -1.4 -1.1 2.5 2 Contribution from price and exchange rate changes 2.9 -3.7 -0.2 … … … … … … … … 2.0 Residual 3/ 7.2 6.6 5.1 4.6 7.6 1.0 0.9 1.5 1.6 0.8 -1.3 3.0 1.8 2 of which: exceptional financing 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.5 1 1.0 Sustainability indicators 0.5 1 PV of PPG external debt-to-GDP ratio ... ... 36.8 36.8 38.7 37.4 35.5 33.8 33.0 30.1 22.1 PV of PPG external debt-to-exports ratio ... ... 106.3 107.0 111.9 110.1 105.6 104.7 104.6 109.2 95.9 0.0 0 PPG debt service-to-exports ratio 15.1 17.7 18.5 17.0 17.1 14.6 14.4 14.4 16.6 14.8 17.8 9 2018 2020 2022 2024 2026 2028 PPG debt service-to-revenue ratio 38.4 43.7 47.9 41.1 37.3 32.9 30.7 29.5 33.0 26.0 27.1 Gross external financing need (Million of U.S. dollars) 1504.1 1443.0 1260.0 2074.6 1425.0 1584.6 1158.9 856.7 2610.5 4522.4 12228.9 Rate of Debt Accumulation Grant-equivalent financing (% of GDP) Key macroeconomic assumptions Grant element of new borrowing (% right scale) Real GDP growth (in percent) 2.2 3.4 8.1 5.6 8.8 5.8 4.4 4.5 5.0 4.3 4.4 7.4 4.9 GDP deflator in US dollar terms (change in percent) -10.6 9.4 -0.8 4.6 -3.8 0.0 2.9 3.3 2.9 2.8 2.7 -0.9 2.4 Effective interest rate (percent) 4/ 7.4 7.6 7.9 6.4 6.8 7.2 7.5 7.6 7.5 5.8 6.0 4.5 6.9 External debt (nominal) 1/ Growth of exports of G&S (US dollar terms, in percent) 8.1 5.9 17.0 9.8 5.1 4.0 6.3 3.5 5.7 5.3 3.6 14.1 5.2 of which: Private Growth of imports of G&S (US dollar terms, in percent) 7.9 -1.1 8.4 4.1 3.4 5.6 6.7 7.5 6.5 6.0 3.8 9.5 5.7 50 Grant element of new public sector borrowing (in percent) ... ... ... 2.8 3.5 3.3 2.1 0.4 0.0 2.9 0.0 ... 2.6 45 Government revenues (excluding grants, in percent of GDP) 13.4 12.9 13.3 14.3 15.8 15.1 15.8 15.8 15.9 15.6 15.1 12.1 15.6 Aid flows (in Million of US dollars) 5/ 724.3 291.7 352.7 327.3 365.1 289.2 121.5 114.5 83.8 2.3 0.2 40 Grant-equivalent financing (in percent of GDP) 6/ ... ... ... 0.5 0.6 0.4 0.2 0.1 0.1 0.1 0.0 ... 0.2 35 Grant-equivalent financing (in percent of external financing) 6/ ... ... ... 6.1 7.3 9.7 5.9 3.6 1.9 2.9 0.0 ... 4.7 30 Nominal GDP (Million of US dollars) 48,595 54,989 58,978 65,191 68,258 72,264 77,628 83,740 90,497 129,120 257,368 Nominal dollar GDP growth -8.6 13.2 7.3 10.5 4.7 5.9 7.4 7.9 8.1 7.2 7.2 6.6 7.4 25 20 Memorandum items: 15 PV of external debt 7/ ... ... 40.8 40.8 42.7 41.4 39.5 37.8 37.0 34.1 26.1 In percent of exports ... ... 117.9 118.7 123.5 121.9 117.5 117.1 117.2 123.7 113.2 10 Total external debt service-to-exports ratio 17.7 20.5 21.2 19.9 19.9 17.5 17.3 17.5 19.8 18.4 22.0 5 PV of PPG external debt (in Million of US dollars) 21729.8 24018.3 26404.3 27029.2 27554.5 28286.6 29873.7 38830.5 56898.5 0 (PVt-PVt-1)/GDPt-1 (in percent) 3.9 3.7 0.9 0.7 0.9 1.9 1.9 0.4 2018 2020 2022 2024 2026 2028 Non-interest current account deficit that stabilizes debt ratio -5.8 2.0 0.7 -0.4 -1.8 2.7 2.6 2.2 1.4 1.4 2.7 Sources: Country authorities; and staff estimates and projections. 0 1/ Includes both public and private sector external debt. 2/ Derived as [r - g - ρ(1+g) + Ɛα (1+r)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, ρ = growth rate of GDP deflator in U.S. dollar terms, Ɛ=nominal appreciation of the local currency, and α= share of local currency-denominated external debt in total external debt. 3/ Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes. 4/ Current-year interest payments divided by previous period debt stock. 5/ Defined as grants, concessional loans, and debt relief. 6/ Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt). 7/ Assumes that PV of private sector debt is equivalent to its face value. 8/ Historical averages are generally derived over the past 10 years, subject to data availability, whereas projections averages are over the first year of projection and the next 10 years. Table 2. Ghana: Public Sector Debt Sustainability Framework, Baseline Scenario, 2015–38 (in percent of GDP, unless otherwise indicated) Actual Projections Average 6/ 2015 2016 2017 2018 2019 2020 2021 2022 2023 2028 2038 Historical Projections Public sector debt 1/ 55.2 57.5 57.7 59.8 62.4 60.4 58.6 56.7 54.0 41.5 26.2 42.2 53.0 Definition of external/domestic Residency- of which: external debt 37.4 37.9 37.5 38.7 40.7 38.5 36.3 34.4 33.4 30.4 21.6 26.9 34.5 debt based of which: local-currency denominated Change in public sector debt 7.2 2.2 0.2 2.1 2.6 -1.9 -1.8 -1.9 -2.7 -2.2 -1.3 Is there a material difference Identified debt-creating flows 3.7 2.4 -1.7 2.0 0.3 -2.5 -2.2 -1.9 -2.3 -2.0 -1.2 0.2 -1.6 Yes between the two criteria? Primary deficit 0.3 1.9 -0.5 1.4 0.0 -1.7 -1.6 -1.2 -1.3 -0.7 -0.8 2.4 -0.9 Revenue and grants 14.9 13.4 13.9 14.6 16.1 15.3 15.9 15.9 16.0 15.6 15.1 13.3 15.7 of which: grants 1.5 0.5 0.6 0.3 0.3 0.2 0.1 0.1 0.1 0.0 0.0 Public sector debt 1/ Primary (noninterest) expenditure 15.2 15.3 13.4 15.9 16.1 13.7 14.3 14.7 14.7 14.9 14.3 15.7 14.8 Automatic debt dynamics 3.4 0.5 -1.1 -0.6 0.3 -0.8 -0.6 -0.6 -1.0 -1.2 -0.3 of which: local-currency denominated Contribution from interest rate/growth differential 1.9 1.5 -0.2 -1.0 -1.4 -0.8 -0.3 -0.4 -0.9 -1.1 -0.3 of which: foreign-currency denominated of which: contribution from average real interest rate 2.9 3.3 4.1 2.1 3.4 2.7 2.2 2.1 1.9 0.7 0.9 of which: contribution from real GDP growth -1.0 -1.8 -4.3 -3.1 -4.8 -3.4 -2.6 -2.5 -2.7 -1.8 -1.2 70 Contribution from real exchange rate depreciation 1.5 -1.0 -0.9 ... ... ... ... ... ... ... ... 60 Other identified debt-creating flows 0.0 0.0 0.0 1.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 0.1 50 Privatization receipts (negative) 0.0 0.0 0.0 -0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10 Recognition of contingent liabilities (e.g., bank recapitalization) 0.0 0.0 0.0 1.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 40 Debt relief (HIPC and other) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 30 Other debt creating or reducing flow (please specify) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 20 Residual 3.5 -0.1 1.9 0.5 4.1 0.5 0.1 -0.3 -0.5 -0.3 -0.2 2.6 0.1 10 Sustainability indicators 0 PV of public debt-to-GDP ratio 2/ ... ... 57.6 59.8 62.4 60.5 58.8 57.0 54.5 42.0 27.1 2018 2020 2022 2024 2026 2028 PV of public debt-to-revenue and grants ratio … … 413.0 411.0 387.0 394.9 369.6 358.4 340.1 268.8 179.1 Debt service-to-revenue and grants ratio 3/ 119.7 133.3 134.8 91.7 74.9 73.2 65.4 67.4 73.2 50.3 35.1 Gross financing need 4/ 18.1 19.8 18.2 14.7 12.0 9.6 8.8 9.5 10.4 7.1 4.5 of which: held by residents of which: held by non-residents Key macroeconomic and fiscal assumptions 70 Real GDP growth (in percent) 2.2 3.4 8.1 5.6 8.8 5.8 4.4 4.5 5.0 4.3 4.4 7.4 4.9 60 Average nominal interest rate on external debt (in percent) 8.4 8.1 8.8 6.6 7.4 7.8 8.0 8.1 7.9 6.1 6.3 4.6 7.3 Average real interest rate on domestic debt (in percent) 5.1 5.1 9.0 3.4 7.0 3.3 2.3 2.2 1.9 -0.5 2.4 -7.5 1.8 50 Real exchange rate depreciation (in percent, + indicates depreciation) 5.7 -2.9 -2.9 … ... ... ... ... ... ... ... 3.2 ... 40 Inflation rate (GDP deflator, in percent) 13.6 15.2 10.4 10.3 6.7 8.6 8.9 9.0 8.6 8.5 6.4 14.9 8.9 30 Growth of real primary spending (deflated by GDP deflator, in percent) -4.7 4.6 -5.4 25.7 9.8 -10.1 9.0 7.4 5.5 6.3 3.6 6.9 6.2 20 Primary deficit that stabilizes the debt-to-GDP ratio 5/ -6.9 -0.3 -0.8 -0.7 -2.7 0.3 0.2 0.7 1.4 1.4 0.4 -2.7 0.6 10 PV of contingent liabilities (not included in public sector debt) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 2018 2020 2022 2024 2026 2028 Sources: Country authorities; and staff estimates and projections. 1/ Coverage of debt: The central government plus social security and extra budgetary funds, central bank, government-guaranteed debt. Definition of external debt is Residency-based. 2/ The underlying PV of external debt-to-GDP ratio under the public DSA differs from the external DSA with the size of differences depending on exchange rates projections. 3/ Debt service is defined as the sum of interest and amortization of medium and long-term, and short-term debt. 4/ Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period and other debt creating/reducing flows. 5/ Defined as a primary deficit minus a change in the public debt-to-GDP ratio ((-): a primary surplus), which would stabilizes the debt ratio only in the year in question. 6/ Historical averages are generally derived over the past 10 years, subject to data availability, whereas projections averages are over the first year of projection and the next 10 years. Figure 1. Ghana: Indicators of Public and Publicly Guaranteed External Debt Under Alternative Scenarios, 2018–28 PV of debt-to GDP ratio PV of debt-to-exports ratio 60 250 50 200 40 150 30 100 20 10 50 Most extreme shock is Exports Most extreme shock is Exports 0 0 2018 2020 2022 2024 2026 2028 2018 2020 2022 2024 2026 2028 Debt service-to-exports ratio Debt service-to-revenue ratio 40 60 35 50 30 40 25 20 30 15 20 10 10 5 Most extreme shock is Exports Most extreme shock is Exports 0 0 2018 2020 2022 2024 2026 2028 2018 2020 2022 2024 2026 2028 Baseline Historical scenario Most extreme shock 1/ Threshold Customization of Default Settings Borrowing Assumptions for Stress Tests* Size Interactions Default User defined Shares of marginal debt No No External PPG MLT debt 100% Tailored Tests Terms of marginal debt Combined CLs No Avg. nominal interest rate on new borrowing in USD 8.9% 8.9% Natural Disasters n.a. n.a. USD Discount rate 5.0% 5.0% Commodity Prices 2/ No No Avg. maturity (incl. grace period) 10 10 Market Financing No No Avg. grace period 5 5 Note: "Yes" indicates any change to the size or * Note: All the additional financing needs generated by the shocks under the stress tests interactions of the default settings for the stress are assumed to be covered by PPG external MLT debt in the external DSA. Default terms tests. "n.a." indicates that the stress test does not of marginal debt are based on baseline 10-year projections. apply. Sources: Country authorities; and staff estimates and projections. 1/ The most extreme stress test is the test that yields the highest ratio in or before 2028. Stress tests with one-off breaches are also presented (if any), while these one-off breaches are deemed away for mechanical signals. When a stress test with a one-off breach happens to be the most exterme shock even after disregarding the one-off breach, only that stress test (with a one-off breach) would be presented. 2/ The magnitude of shocks used for the commodity price shock stress test are based on the commodity prices outlook prepared by the IMF research department. 11 Figure 2. Ghana: Indicators of Public Debt Under Alternative Scenarios, 2018–28 PV of Debt-to-GDP Ratio 90 80 70 60 50 40 30 Most extreme shock is Commodity price 20 10 0 2018 2020 2022 2024 2026 2028 PV of Debt-to-Revenue Ratio Debt Service-to-Revenue Ratio 600 120 500 100 400 80 300 60 200 40 100 Most extreme shock is Commodity price 20 Most extreme shock is Commodity price 0 0 2018 2020 2022 2024 2026 2028 2018 2020 2022 2024 2026 2028 Baseline Most extreme shock 1/ Public debt benchmark Historical scenario Borrowing Assumptions for Stress Tests* Default User defined Shares of marginal debt External PPG medium and long-term 51% 51% Domestic medium and long-term 35% 35% Domestic short-term 15% 15% Terms of marginal debt External MLT debt Avg. nominal interest rate on new borrowing in USD 8.9% 8.9% Avg. maturity (incl. grace period) 10 10 Avg. grace period 5 5 Domestic MLT debt Avg. real interest rate on new borrowing 3.3% 3.3% Avg. maturity (incl. grace period) 3 3 Avg. grace period 2 2 Domestic short-term debt Avg. real interest rate 2.3% 2.3% * Note: The public DSA allows for domestic financing to cover the additional financing needs generated by the shocks under the stress tests in the public DSA. Default terms of marginal debt are based on baseline 10-year projections. Sources: Country authorities; and staff estimates and projections. 1/ The most extreme stress test is the test that yields the highest ratio in or before 2028. The stress test with a one-off breach is also presented (if any), while the one-off breach is deemed away for mechanical signals. When a stress test with a one-off breach happens to be the most exterme shock even after disregarding the one-off breach, only that stress test (with a one-off breach) would be presented. 12 Table 3. Ghana: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2018–28 (In percent) Projections 1/ 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 PV of debt-to GDP ratio Baseline 37 39 37 35 34 33 33 32 31 30 30 A. Alternative Scenarios A1. Key variables at their historical averages in 2018-2028 2/ 37 42 43 45 48 50 52 53 53 52 51 0 #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A B. Bound Tests B1. Real GDP growth 37 42 43 41 39 38 37 37 36 35 34 B2. Primary balance 37 42 45 44 43 43 43 42 42 41 40 B3. Exports 37 46 57 55 53 52 51 50 47 44 41 B4. Other flows 3/ 37 41 42 40 38 37 37 36 35 33 32 B5. Depreciation 37 47 43 41 38 38 37 36 36 36 36 B6. Combination of B1-B5 37 46 46 44 42 41 41 40 39 37 36 C. Tailored Tests C1. Combined contingent liabilities 37 44 43 41 41 40 40 40 39 39 39 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 37 39 39 37 36 35 35 34 33 31 31 C4. Market Financing 37 43 42 40 38 38 37 36 35 34 33 Threshold 40 40 40 40 40 40 40 40 40 40 40 PV of debt-to-exports ratio Baseline 107 112 110 106 105 105 106 107 108 108 109 A. Alternative Scenarios A1. Key variables at their historical averages in 2018-2028 2/ 107 122 128 135 149 159 169 177 183 184 183 0 107 113 109 105 105 102 94 84 72 56 40 B. Bound Tests B1. Real GDP growth 107 112 110 106 105 105 106 107 108 108 109 B2. Primary balance 107 120 133 131 133 136 140 142 144 145 146 B3. Exports 107 153 224 218 219 220 225 225 218 209 201 B4. Other flows 3/ 107 118 123 118 118 118 120 121 120 118 117 B5. Depreciation 107 107 99 95 93 93 94 96 98 99 102 B6. Combination of B1-B5 107 134 124 142 143 143 146 147 146 144 143 C. Tailored Tests C1. Combined contingent liabilities 107 126 127 123 127 128 131 134 136 138 140 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 107 112 113 110 110 111 113 113 113 112 112 C4. Market Financing 107 112 111 107 106 107 108 108 107 107 107 Threshold 180 180 180 180 180 180 180 180 180 180 180 Debt service-to-exports ratio Baseline 17 17 15 14 14 17 16 16 15 15 15 A. Alternative Scenarios A1. Key variables at their historical averages in 2018-2028 2/ 17 17 15 16 17 21 21 24 24 27 29 0 17 16 14 14 15 17 16 17 15 14 13 B. Bound Tests B1. Real GDP growth 17 17 15 14 14 17 16 16 15 15 15 B2. Primary balance 17 17 16 17 17 19 19 20 21 21 21 B3. Exports 17 20 23 26 26 30 29 33 37 37 36 B4. Other flows 3/ 17 17 15 15 16 18 17 18 18 18 18 B5. Depreciation 17 17 14 13 13 16 15 14 12 12 12 B6. Combination of B1-B5 17 19 19 19 19 22 21 23 22 22 22 C. Tailored Tests C1. Combined contingent liabilities 17 17 16 16 16 18 18 18 17 17 17 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 17 17 15 15 15 18 17 17 16 16 16 C4. Market Financing 17 17 15 15 15 23 22 18 15 14 15 Threshold 15 15 15 15 15 15 15 15 15 15 15 Debt service-to-revenue ratio Baseline 41 37 33 31 30 33 30 30 27 26 26 A. Alternative Scenarios A1. Key variables at their historical averages in 2018-2028 2/ 41 37 34 34 35 41 40 44 45 48 51 0 41 36 32 30 30 34 31 31 27 24 22 B. Bound Tests B1. Real GDP growth 41 41 38 35 34 38 35 34 31 30 30 B2. Primary balance 41 38 35 35 34 38 37 38 38 38 38 B3. Exports 41 38 38 41 40 44 41 45 51 49 48 B4. Other flows 3/ 41 37 34 33 32 35 33 34 33 32 31 B5. Depreciation 41 48 41 37 35 40 37 34 29 28 28 B6. Combination of B1-B5 41 40 39 37 36 40 37 40 37 36 36 C. Tailored Tests C1. Combined contingent liabilities 41 38 36 34 33 37 34 34 31 31 30 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 41 44 39 37 35 38 34 32 29 28 28 C4. Market Financing 41 37 34 32 31 46 43 33 28 26 26 Threshold 18 18 18 18 18 18 18 18 18 18 18 Sources: Country authorities; and staff estimates and projections. 1/ A bold value indicates a breach of the threshold. 2/ Variables include real GDP growth, GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows. 3/ Includes official and private transfers and FDI. 13 Table 4. Ghana: Sensitivity Analysis for Key Indicators of Public Debt, 2018–28 Projections 1/ 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 PV of Debt-to-GDP Ratio Baseline 60 62 61 59 57 55 52 49 47 44 42 A. Alternative Scenarios A1. Key variables at their historical averages in 2018-2028 2/ 60 62 60 58 56 53 51 49 47 45 43 0 #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A B. Bound Tests B1. Real GDP growth 60 70 74 74 75 74 74 73 73 73 73 B2. Primary balance 60 67 73 72 70 68 66 63 61 59 57 B3. Exports 60 68 77 75 73 71 68 64 60 55 51 B4. Other flows 3/ 60 65 65 63 61 59 56 53 50 47 44 B5. Depreciation 60 68 65 63 60 58 54 51 49 46 43 B6. Combination of B1-B5 60 66 70 69 67 65 63 61 59 57 55 C. Tailored Tests C1. Combined contingent liabilities 60 71 70 68 67 65 62 60 58 55 54 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 60 67 72 76 80 81 82 82 82 81 82 C4. Market Financing 60 62 61 59 58 55 52 49 46 44 41 Public debt benchmark 55 55 55 55 55 55 55 55 55 55 55 PV of Debt-to-Revenue Ratio Baseline 411 387 395 370 358 340 325 310 296 281 269 A. Alternative Scenarios A1. Key variables at their historical averages in 2018-2028 2/ 411 383 392 364 350 333 319 307 296 285 276 0 92 51 48 55 51 57 62 58 52 55 57 B. Bound Tests B1. Real GDP growth 411 434 479 465 468 463 463 462 464 464 467 B2. Primary balance 411 417 478 452 442 425 413 400 389 377 366 B3. Exports 411 424 502 472 460 441 426 406 380 352 326 B4. Other flows 3/ 411 401 424 397 386 367 352 335 318 300 284 B5. Depreciation 411 421 426 395 380 359 341 324 309 292 278 B6. Combination of B1-B5 411 408 456 432 423 408 396 384 374 362 351 C. Tailored Tests C1. Combined contingent liabilities 411 442 454 429 419 403 390 377 366 354 343 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 411 479 540 550 555 543 532 515 518 520 523 C4. Market Financing 411 387 396 372 362 344 328 310 295 279 265 Debt Service-to-Revenue Ratio Baseline 92 75 73 65 67 73 70 63 53 50 50 A. Alternative Scenarios A1. Key variables at their historical averages in 2018-2028 2/ 92 71 66 60 58 62 60 55 52 52 52 0 92 51 48 55 51 57 62 58 52 55 57 B. Bound Tests B1. Real GDP growth 92 82 86 81 86 95 95 90 82 84 87 B2. Primary balance 92 76 81 82 84 94 85 79 73 71 72 B3. Exports 92 75 76 74 76 81 78 76 74 70 69 B4. Other flows 3/ 92 75 74 68 70 75 72 67 58 56 55 B5. Depreciation 92 75 76 71 70 77 75 67 58 56 55 B6. Combination of B1-B5 92 75 77 78 76 89 82 73 65 61 61 C. Tailored Tests C1. Combined contingent liabilities 92 76 86 74 87 84 79 74 62 59 60 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 92 88 95 93 102 111 109 102 94 96 100 C4. Market Financing 92 75 74 67 69 86 83 66 54 50 50 Sources: Country authorities; and staff estimates and projections. 1/ A bold value indicates a breach of the benchmark. 2/ Variables include real GDP growth, GDP deflator and primary deficit in percent of GDP. 3/ Includes official and private transfers and FDI. 14 Figure 3. Ghana: Drivers of Debt Dynamics, Baseline Scenario External debt Gross Nominal PPG External Debt Debt-creating flows Unexpected Changes in Debt 1/ (in percent of GDP; DSA vintages) (percent of GDP) (past 5 years, percent of GDP) Current DSA 40 80 Residual 40 Previous DSA proj . 70 DSA-2013 20 30 Interquartile Price and range (25-75) 60 exchange rate 20 50 0 Real GDP growth Change in PPG 10 40 debt 3/ -20 Nominal 30 interest rate 0 20 -40 Median Current -1 0 10 account + FDI -60 -2 0 0 Change in Contribution of 5-year 5-year Distribution across LICs 2/ 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 PPG debt 3/ unexpected historical projected -3 0 changes change change Public debt Gross Nominal Public Debt Debt-creating flows Unexpected Changes in Debt 1/ (in percent of GDP; DSA vintages) (percent of GDP) (past 5 years, percent of GDP) Residu al 40 Current DSA 30 Previous DSA proj. DSA-2013 Other debt Interquartile 80 creatin g flows 25 range (25-75) 20 70 Real 20 60 Exchange rate 50 depreciation Real GDP 0 15 growth Change in debt 40 10 Real interest 30 rate -20 5 20 Primary deficit 0 10 -40 Median 0 Chan ge in debt 5-year 5-year -5 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Distribution across LICs 2/ historical projected Contribution of change change -10 unexpected 1/ Difference betw een anticipated and actual contributions on debt ratios. 2/ Distribution across LICs for w hich LIC DSAs w ere produced. 3/ Given the relatively low private external debt for average low -income countries, a ppt change in PPG external debt should be largely explained by the drivers of the external debt dynamics equation. 15 Figure 4. Ghana: Realism Tools 3-Year Adjustment in Primary Balance Fiscal Adjustment and Possible Growth Paths 1/ (Percentage points of GDP) Distribution 1/ 12 2 14 Projected 3-yr 10 12 adjustment 1 3-year PB adjustment greater than In percentage points of GDP 2.5 percentage points of GDP in 10 approx. top quartile 8 0 In percent 8 6 6 -1 4 4 -2 2 2 0 0 -3 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 -4.5 -4.0 -3.5 -3.0 -2.5 -2.0 -1.5 -1.0 -0.5 More 2012 2013 2014 2015 2016 2017 2018 2019 Baseline Multiplier = 0.2 Multiplier = 0.4 Multiplier = 0.6 Multiplier = 0.8 1/ Bars refer to annual projected fiscal adjustment (right-hand side scale) and lines show 1/ Data cover Fund-supported programs for LICs (excluding emergency financing) approved since possible real GDP growth paths under different fiscal multipliers (left-hand side scale). 1990. The size of 3-year adjustment from program inception is found on the horizontal axis; the percent of sample is found on the vertical axis. Public and Private Investment Rates Contribution to Real GDP growth (percent of GDP) (percent, 5-year average) 24 7 22 6 20 18 5 16 14 4 12 10 3 8 2 6 4 1 2 0 0 Historical Projected (Prev. DSA) Projected (Curr. DSA) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Gov. Invest. - Prev. DSA Gov. Invest. - Curr. DSA Contribution of other factors Priv. Invest. - Prev. DSA Priv. Invest. - Curr. DSA Contribution of government capital 16 Figure 5. Ghana: Market-Risk Indicators GFN 1/ EMBI 2/ Benchmarks 14 570 Values 15 562 Breach of benchmark Yes No Potential heightened liquidity needs Moderate 1/ Maximum gross financing needs (GFN) over 3-year baseline projection horizon. 2/ EMBI spreads correspond to the latest available data. 50 PV of debt-to GDP ratio PV of debt-to-exports ratio 200 45 180 40 160 35 140 30 120 25 100 20 80 15 60 10 40 5 20 0 0 2018 2020 2022 2024 2026 2028 2018 2020 2022 2024 2026 2028 Debt service-to-exports ratio Debt service-to-revenue ratio 25 50 45 20 40 35 15 30 25 10 20 15 5 10 5 0 0 2018 2020 2022 2024 2026 2028 2018 2020 2022 2024 2026 2028 Baseline Market financing Threshold Sources: Country authorities; and staff estimates and projections. 17