Country Director for the World Bank, Pierre Frank Laporte, says Ghana is unlikely to slip into debt-distress despite its rising debt stock.
This, Mr Laporte explained is due to the fact that managers of the Ghanaian economy are taking steps to prevent the country from becoming debt-distressed.
In addition, he noted that a larger proportion of Ghana’s debt are cheap long term debts which offers minimal risk of a country becoming debt-distressed.
“If you look at Ghana’s debt structure, a large proportion of the debts are multilateral in nature ie debts from the World Bank and IMF which are long term and cheap debts with minimal risk. For now the World Bank doesn’t see any risk of Ghana falling into debt-distress, the risk we do see is the one brought about by Covid and the financial markets being unstable,” he stated on Joy News’ PM Express monitored by norvanreports.
“But a critical point is for Ghana to go back to macroeconomic stability, if I look at Ghana and other countries I say this is a country with good macroeconomic stability, we see that they are managing the economy well, and so as long as Ghana can maintain firm macroeconomic stability I don’t see it flipping into debt distress,” he added.
The classification of Ghana as a debt-distressed country would imply that Ghana would not be able to fulfill its debt obligations to creditors.
Ghana, as of June 30, 2020, and based on the most recent published data by the IMF, was listed among 28 countries in high risk of debt-distress.
The country’s debt to Gross Domestic Product (GDP) is projected to hit 76.7 per cent by the end of 2020.