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Business News of Wednesday, 29 June 2011

Source: Reuters

Ghana debt rises 65 pct since Mills takes office

Ghana's debt stood at $13.4 billion in mid-May, up from around $8.1 billion when President John Atta Mills was elected in late 2008, the government said on Wednesday.

The debt-to-GDP ratio stood at about 35 percent, "well within sustainable range," deputy Information Minister Samuel Okudzeto Ablakwa said in a statement.

He said Ghana's borrowing under Mills' government had been mostly focused on financing health, education, road and energy infrastructure projects, needed to support the West African state's robust growth.

"For Ghana to grow at the expected rate, it needs to expand and improve its infrastructure for which there is need for increased financing," Ablakwa said.

"As a social democratic party, the (ruling) NDC has always held the view that it is not about how much you borrow, but the projects for which you borrow and the efficient utilization of the borrowed funds," he said.

Ghana, the world's no. 2 cocoa grower and Africa's second largest gold miner, became Africa's latest oil producer last year with the startup of the offshore Jubilee field, and oil revenues are expected to help propel the country's economy to double-digit growth this year.

But the country is also aiming to reign in its public deficit, an issue analysts have been watching closely as it moves toward potentially costly elections in 2012.

Among Ghana's biggest recent loans, the government last year said it would draw $2.85 billion from a $13 billion Chinese loan facility to fund a road improvement project.

The country plans to issue a 300 million cedi five-year bond by early August that will be open to foreign investors -- the first five-year bond issued by the West African state since 2007.