Ghana Classified Among 10 Countries Globally At Risk of Debt Distress – CFR Sovereign Risk Tracker

Ghana has been classified among 10 countries globally by CFR Sovereign Risk Tracker that are at risk of debt distress.

The country scored a mark of 10, meaning it has a 50% or higher chance of defaulting in the next five years.

This is coming after the nation’s debt reached an alarming level of ¢391 billion as of quarter one, 2022, approximately 78% of Gross Domestic Product (GDP).

The nine other countries alongside Ghana captured by the CFR Sovereign Risk Tracker are Argentina, Lebanon, Pakistan, Russia, Sri Lanka, Tunisia, Ukraine, Venezuela and Egypt.

Egypt is the only country with slightly below 50% chance of defaulting in its sovereign loans.

Interestingly, Ghana is the only Sub-Saharan African country among the 10 countries. However, there are Tunisia and Egypt from the African continent.

Per the data, Ghana’s short term debt and current account situation is equivalent to 79% of its reserves, whilst the current account and fiscal balance to GDP for 2022 are estimated at a deficit of 3.6% and 8.4% respectively.

The International Monetary Fund had already stated in its April 2022 Fiscal Monitor that Ghana’s public debt stock is not going to take a nose dive anytime soon as it’s expected to hit 84.6% of GDP by the end of 2022.

The country’s debt-to-GDP ratio, it said, will increase from 2022 to 88.4% in 2026, before falling to 87.4% in 2027.

But prior to that, it will record relatively same debt-to-GDP ratio of 84% in 2022 and 2023, and later surge to 85% and 86% in 2024 and 2025 respectively.

For the World Bank, it earlier in March 2022 warned that Ghana has exceeded the 80% GDP mark, putting the country in a tighter corner with respect to financing and interest payments.

Country Director, Pierre Laporte, speaking at the One Ghana Movement lecture, said the situation might have changed now as Ghana keeps borrowing, adding “the data as we know is close to 80% of GDP. Probably, now as we speak, it might have exceeded.”

“The fiscal deficit [9.7% in December 2021 per government data], unfortunately, with COVID-19 needs to be urgently brought down. Inflation must also be brought down. This is an interesting discussion, and we must acknowledge the situation on the ground”, Mr Laporte explained.

He further said the country is in a very challenging situation “as some of the panel have acknowledged that. We call it a crisis. We can describe it in many ways”.

“It’s a really serious situation, and at the World Bank, we’ve not hidden the fact. We discussed with the Minister [Ken Ofori-Ata] and with all the people in finance and the Head of State [President Akufo-Addo]. The situation is very difficult right now; Ghana faces a very tough road ahead to restore macro sustainability”, Mr Laporte added.

Source: myjoyonline