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Ghana's economy not considered sufficiently creditworthy — Bright Simons

January 17th 2022, 7:09:56 am

Honorary Vice President of IMANI-Africa, Bright Simons has said the economy of Ghana is not considered sufficiently creditworthy.

Bright Simons

A situation he believes is the growing tendency among investors in higher risk for Ghana's debt which has been apparent before COVID-19 pandemic adding that Ghana is likely to go into default if pragmatic measures are not taken to address the country's fiscal debt.

Bright Simons stated that it has become critical for more public sector borrowing in order to survive as a country.

Speaking in an interview on Newsfile on Saturday, January 15, 2022, he said the debt is due to Ghana's excessive borrowing.

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According to him, "The economy is not considered sufficiently creditworthy. This is not something that is a COVID phenomenon, this is something we've been dealing with for quite a while. All the way from February 2020, we were already paying up to one and a half percent more than our African compatriots, and today we are still paying more than a percent more than African compatriots; so, for the average African borrower, our creditworthiness has been lower.

"We've seen in the last couple of months seriously worsening perceptions from investors around the world about Ghana's creditworthiness. We’ve also seen that long before this crisis, investors, generally, have been charging Ghana more to lend to Ghana."

He explained that "If your country is creditworthy, investors will typically charge you less to lend to you; if you are not creditworthy, they charge you more. One of the most objective ways of determining whether your country is creditworthy is often to look at how much investors will charge you in order to lend to you."

He said the country's fiscal space is currently under enormous fiscal pressure, a situation he believes makes a strong case for the country to borrow in order to survive.

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Speaking on the Fitch ratings that rated Ghana as the worst-performing in the continent, Bright Simons said "Essentially, Ghana's debt to GDP ratio is about 83% today and that is considerably above the African average. We are spending more than 45% of all the money that we make in the country on servicing our debts and a good chunk of the rest on paying government workers who may constitute 10% or so of the total workforce.

"When we say we are B- in Fitch, we are just one step from being considered almost in default because we have substantial risks to our economy. 2022 is going to be one of those years where the revenue prospects of the government are going to assume outsized proportions."

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Kojo Emmanuel

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