Report shows that Ghana has accumulated so much debt that it may not be able to repay

A report prepared by the Economic Commission for Africa (ECA) and launched at the 52nd Session of the Conference of African Ministers of Finance, Planning and Economic Development, in Marrakech, Morocco.

According to the report, Ghana is among 10 African countries facing this high risk of debt distress.

Cameroon, Cape Verde, Central African Republic, Djibouti, Ethiopia, The Gambia, Mauritania, São Tomé and Príncipe, Zambia were the countries among Ghana.

The report warns of rising public debt in Africa which has led to increased government spending on interest payments.

The largest increases have been among non-resource-rich countries, whose governments devoted nearly 10 per cent of total spending to interest payments in 2016, more than double the 4 per cent in 2011.

Oil-exporting countries devoted close to 13 per cent of fiscal spending on interest payments in 2008, less than 4 per cent in 2012 as interest rates fell and then nearly 7 per cent in 2015.

Ghana’s total external debt rose from 19.3 per cent of Gross Domestic Product (GDP) in 2009 to 42.8 per cent in 2016. Since 2007 the government has tapped the Eurobond market, with an initial issuance of a $750 million Eurobond that matured in 2017.

A further $750 million bond was issued in 2013, partly to repay an earlier bond at a lower rate of interest. When the earlier bond matured, Ghana issued new bonds, with assistance from the World Bank, to refinance the outstanding amounts, culminating in a planned $2.5 billion bond, $1.75 billion of which is to be used to refinance earlier borrowing at a lower coupon rate (IMF, 2018d). This refinancing aims to facilitate the management of public external debt in Ghana in the short term, the report stated.

However, the ECA noted that the growth in West Africa climbed from 2.4 per cent in 2017 to 3.2 per cent in 2018. The growth, it said was reflecting higher growth in all countries in the subregion except Burkina Faso, Guinea and Guinea-Bissau.

It projected West Africa’s growth to be moderate in 2019, at 3.4 per cent, before rising to 3.8 per cent in 2020, lifted by good economic performance in Ghana and Nigeria.