Ghana has been classified as not only a high debt but a distressed country too by the World Bank.
According to the World Bank, Ghana’s debt to Gross Domestic Product (GDP) will hit 104.6 % by the end of 2022, an indication that it is a high debt country.
Reports show Ghana’s debt and deteriorating economy is a result of widening government deficit, rising debt service cost, and massive weakening of the cedi.
The economy heat is definitely affecting the public and situation may worsen even more as based on the World Bank projection.
The country’s economy size is currently estimated at about $72 billion but the country is expected to spend 70 % of its revenue to service debt this year.
The World Bank stated that Ghana needs $1.5 billion assistance from IMF, and this may only help regain access to credit markets and shore up public finances.
Sharing the statement;
Debt is expected to jump in Ghana to 104.6 % of GDP, from 76.6 % a year earlier amid a widened government deficit, massive weakening of the cedi, and rising debt service costs. The country’s debt is expected to remain elevated at 99.7 % and 108. 8 % 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.
As a result, the country lost access to international markets.
Nevertheless, despite the negotiation with the IMF, investors remain nervous about the country’s debt sustainability.
Ghana continues to be classified at high risk of debt distress.
