The government of Ghana spent GHS6.40bn on interest payments in the first quarter of 2020.
This represented 1.7% of Gross Domestic Product (GDP) and in line with the envisioned target of GHS6.42 billion.
According to the Bank of Ghana, total interest payments constituted almost 64% of domestic revenue, undermining fiscal flexibility.
While domestic interest payments outturn was close to the proposed target, external interest payments were somewhat above the planned target due to additional payments not factored in the programme targets, it said.
Together with wages and salaries, they accounted for over 120% of domestic revenue, suggesting a lack of fiscal space and inherent rigidities in the budget execution.
Wages and salaries amounted to GH¢6.50 billion (1.7% of GDP), above the envisioned target of GH¢5.94 billion (1.5% of GDP).
The situation means that government depends on grants and other sources of funds to finance capital projects, raising concerns going forward.
In 2020, the government is expected to spend GHS23 billion on interest payments but that may not be so because of the coronavirus pandemic.
Some multilateral institutions and sovereign nations that support the government budget may cut loan repayment schedule or cancel some debts owed them.