The World Bank has warned Ghana and other sub-Saharan African countries with debt sustainability issues that they will have a tough time borrowing from the international market this year.
Ghana’s high debt portfolio has caused it to be classified by the World Bank and International Monetary Fund (IMF) as among the countries at high risk of debt distress.
Ghana’s public debt as of September 2021 stood at GH¢341.8billion, representing 77.8 per cent of GDP.
Of this amount, the external debt component of GH¢163.7billion represents 37.2 per cent of GDP.
Meanwhile, the 2022 budget shows government plans to, in the meantime, borrow US$750million from international sources with the option of further increasing by another $750 million.
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In all, total foreign financing and exceptional financing (use of IMF Special Drawing Rights [SDR] allocation) will amount to GH¢9 billion, representing 1.8 per cent of GDP.
But the World Bank is of the view that all sub-Saharan countries facing debt sustainability challenges, which includes Ghana, will find it tough raising the needed finances from external sources – implying that the country’s plan to raise up to US$1.5billion from the international market is in peril.
“Countries facing debt sustainability challenges may face reduced access to external funding, forcing abrupt fiscal adjustment,” the World Bank Global Economic Prospect report on sub-Saharan Africa has stated.
Presenting the 2022 Budget in Parliament late last year, Finance Minister, Ken Ofori-Atta, said even though he is aware of the challenges associated with borrowing from the international market, the government will still explore any available opportunity in sourcing funds from abroad.