Window of Opportunity

Ghana’s worsening debt market access means IMF relief needed: economists

By David Whitehouse

Premium badge Reserved for subscribers

Posted on November 4, 2021 11:46

 © File photo of Ghana President Nana Akufo-Addo. REUTERS/Hannah McKay/Pool
File photo of Ghana President Nana Akufo-Addo. REUTERS/Hannah McKay/Pool

The prospect of Ghana being locked out of international debt markets makes it urgent for the government to seek an IMF debt-relief programme before public finances deteriorate further, economists say.

The government, which sold $3bn of eurobonds in March, aimed to sell a further $1bn of debt on the international markets this year. It dropped those plans in October, citing market conditions.

The failure to access debt markets is “worrying, but not catastrophic,” says James Dzansi, an economist at the International Growth Centre in Accra. “It’s a signal to the government that it needs to explore other options.” The easiest and most prudent course would be to go to the IMF sooner rather than later, he says.

According to the IMF, Ghana’s public debt stands at 79% of the GDP. However, Dzansi argues that debt to GDP is the wrong metric to measure Ghana’s position. More relevant, he says, is the ratio of debt-service payments to fiscal income. Fitch predicts that general government interest expense will be almost 47% of revenue in 2022. Dzansi says the country is spending about twice as much

There's more to this story

Get unlimited access to our exclusive journalism and features today. Our award-winning team of correspondents and editors report from over 54 African countries, from Cape Town to Cairo, from Abidjan to Abuja to Addis Ababa. Africa. Unlocked.

Subscribe Now

cancel anytime