Ghana’s economic crisis deepens as BoP deficit reaches $3.64bn
Ghana’s economic crisis continues to deepen as new data from the central bank reveals a deficit of $3.64 billion in December, an increase from the previous quarter’s deficit of $3.4 billion.
The nation is grappling with a rising consumer inflation rate of 54.1%, a cedi currency that has depreciated by about 50% annually, and interest payments on government debt that have surged to between 70% and 100% of GDP.
Experts say the main driver of Ghana’s balance of payments troubles is a sharp reversal in capital flows, with the country’s capital account deficit widening to $2.18 billion in December, compared to $1.64 billion in September.
In contrast, last year at this time, Ghana had a capital account surplus of more than $3.3 billion.
In an effort to address the crisis, Ghana secured a $3 billion staff-level bailout from the International Monetary Fund in 2020, but still must restructure its debts in order to secure executive board approval.
The country has requested to restructure its bilateral debt under the Common Framework platform supported by the Group of 20 major economies and is currently in negotiations for a domestic debt exchange program with local bondholders.
