A study conducted by GN Research and published yesterday in Accra said the astronomical increase in government public debt since 2012 has "impacted negatively on real economic output ."

The study said high government debt stock may have contributed immensely to Ghana’s economic growth if proceeds were used for infrastructural development needed to accelerate the production of goods and services.

Within the first nine months of 2015, government public debt stood at GHC92.2 billion, marking an increase from GHC76.1 billion recorded by the end of 2014. Coupled with weak macroeconomic fundamentals, the public debt-to-GDP soared to 69.1% by end of September 2015, according to the study.

Additionally, the study said, "as at end of third quarter 2015, the amount of interest and maturity payments on domestic debts alone stood at GHC48.96 billion, representing a little over 38% increase from the 2014Q3 estimates."

"Given the strategy by government," the report said, "to replace maturing short term debts with high cost long term debts whereas the accumulation of short term debts continues unabated with high interest payments, it is very likely that the primary objective of the current government debt management strategy may not be achieved."

The under-subscription of the GHC 500 million, 3-year bond issued yesterday by about 14.8%, according to GN Research, signals wrong timing by the Ministry of Finance. Again, the coupon rate agreed on the bond was 24.75% as compared to 24% and 23.85% gotten for the 5-year bond and 3-year bond respectively issued late last year.

This high rate is expected to serve as a bench mark rate for future government and corporate bonds as foreign investors renews their infatuation towards U.S stocks. Hence, cost of borrowing and the risk of default are expected to remain high within the short to medium term, the report added.