According to a World Bank analysis, Ghana is in serious debt difficulty and its debt to GDP ratio may reach 100%.
The World Bank has categorized Ghana as a high debt, distressed country.
Ghana's growing debt-to-Gross Domestic Product (D2P) ratio is now anticipated to reach 104 percent by the end of this year, according to the Bank's October 2022 Africa Pulse Report.
According to the research, the depreciation of the cedi, increasing government deficit, and rising debt payment costs are to blame for the development, which would mark an increase from 76.6 percent a year earlier.
Additionally, it listed Ghana's loss of access to global capital markets as a contributing factor.
The research stated that due to a widening of the government deficit, a significant depreciation of the cedi, and increased debt payment costs, Ghana's debt is predicted to increase to 104.6% of GDP from 76.6% a year ago.
The debt of the nation is anticipated to stay high, coming in at 99.7% and 101.8% of GDP in 2023 and 2024, respectively. Since December 2021, the sovereign spread has expanded by 233 basis points as a result of tightening financial conditions worldwide and a decline in the local currency, it was said.
Ghana has started negotiating for an economic support program with the International Monetary Fund at the time of the World Bank's prediction.
Officials from the Fund are performing a Debt Sustainability Analysis for Ghana in advance of the potential program, which is a crucial requirement task for the nation, which is dealing with a significant debt burden.
The World Bank, however, stated that "investors remain apprehensive about the country's debt sustainability" despite Ghana's goal of obtaining $3 billion from the Fund to restore macroeconomic stability and strengthen public finances.
The recent economic downgrades into deeper junk status by international credit rating agencies like Fitch, Moody's, and Standards & Poor's, however, brought these worries to light.
For their part, the agencies pointed to recent macroeconomic deterioration, a further escalation of the government's liquidity and debt sustainability issues, as well as rising default risk, as causes.
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