Ghana’s debt to GDP ratio is projected to hit 104.6%, up from 76.6% in 2021, a report from the World Bank has revealed.
This is a far cry from government projections and doesn’t augur well for negotiations with the International Monetary Fund (IMF).
“The country’s debt is expected to remain elevated at 99.7 and 101.8 percent of GDP in 2023 and 2024, respectively. Tightening of financial conditions globally along with the fall of the domestic currency widened the sovereign spread by 233 basis points since December 2021.” the report revealed.
“As a result, the country lost access to international markets. It needs $1.5 billion in assistance from the IMF, which could help to shore up public finances and regain access to credit markets,” it said in its its October 2022 Africa Pulse Report,
It added that “Nevertheless, despite the negotiation with the IMF, investors remain nervous about the country’s debt sustainability.
“These concerns were expressed by the country’s local and foreign currency ratings downgrade from B-/B to CCC+/C. As a result, despite the news, the cedi fell further with ripple effects on inflation.”
Meanwhile, negotiations between the government of Ghana and the IMF over Ghana’s debt sustainability continues.
The Accra leg of negotiations are over and Finance Minister, Ken Ofori-Atta, says the negotiations would continue in the United States.
Speaking with journalists after the signing ceremony of the $1.13 billion syndicated loan agreement on October 3, Ken Ofori-Atta said Ghanaian authorities will be in Washington DC in the coming weekend to continue negotiations.
“We are very confident that the discussions that we are having with the Fund will put us in the right landing zone. Officials from the ministry will go to Washington DC at the end of the week to continue with the discussions,” Ken Ofori-Atta said.
Providing an update on Ghana’s debt sustainability analysis, the Finance Minister said, “government is getting to a point of understanding the debt sustainability numbers with the IMF. I believe this programme will become a historic resolution as demonstration to other countries on the continent”.
Meanwhile, the IMF is reported to have asked Ghana to add the 2 billion Sinohydro loan from China and the 1.5 billion COCOBOD syndicated loan taken for the 2021/2022 season to its current debt stock.
“The situation is dire. Clearly, the debt sustainability assessment is going to tell us some more but even without that incremental information we are all aware that we are in debt distressed as a nation.” a Former Deputy Finance Minister, Mona Quartey tells TV3.
“Basically, even at the 78 pre cent that we thought we were as at June-July and now, with the news that IMF will like to add the Sinohydro debt and the COCOBOD debt which hasn’t been added hitherto, but will now be added, it will go to 80 per cent, that will take us way above the average debt to GDP ratio for most developing countries, which stands at about 60 per cent on the average. So we will be somewhere in the 80s if we are not careful by the end of this engagement.”
Source: theGhanaianVoice.Com