"Ghana’s external debt to GDP ratio ranked the sixth highest in Africa"

" Ghana's external debt to GDP ratio ranked the sixth highest in Africa \r\n\r\nGhana's external debt-to-GDP ratio reached approximately 39.5% in 2022 positioning it as the sixth highest among African nations, says the African Development Bank (AfDB).\r\n\r\nThe alarming data revealed in the African Development Bank's 2023 West Africa Economic Outlook Report underscores the nation's predicament, as this debt ratio surpasses the regional average of 29.6%.\r\n\r\nThe close of 2022 saw Ghana's external debt soar to a staggering $29.0 billion, distinguishing the country from its peers within the Economic Community of West African States (ECOWAS) as the sole nation classified as debt distress.\r\n\r\nNotably, the surge in external debt stems largely from the burgeoning issuance of Eurobonds, the report details. This trend in Eurobond issuance, observed since 2011 in countries such as C\u00f4te d'Ivoire, Ghana, Nigeria, Senegal, and more recently Benin, has amplified external debt dynamics in the region.\r\n\r\nHowever, this financial maneuver exposes these nations to potential risks stemming from exchange rate depreciation and the ongoing global normalization of monetary policy.\r\n\r\n\u201cIn\u00a0 West\u00a0 Africa,\u00a0 external\u00a0 debt\u00a0 accounts\u00a0 for\u00a0 the\u00a0 largest\u00a0 proportion\u00a0 of\u00a0 the\u00a0 total\u00a0 public\u00a0 debt\u00a0 portfolio in most countries except Nigeria and Togo.\u00a0 External\u00a0 debt\u00a0 increased\u00a0 from\u00a0 an\u00a0 average\u00a0 of\u00a0 13.8%\u00a0 of\u00a0 GDP\u00a0 in\u00a0 2014\u00a0 to\u00a0 29.6%\u00a0 in\u00a0 2022. External debt accumulation was facilitated by a rise in the issuance of Eurobonds. Eurobonds have been issued by C\u00f4te d\u2019Ivoire, Ghana, Nigeria, and Senegal since 2011, and by Benin since 2019\u201d, the report mentioned.\r\n\r\nDelving deeper, the report underscores key drivers that fuel the external debt dynamics in the West African landscape. Rapid exchange rate depreciation, particularly acutely felt by commodity-exporting nations, coupled with high primary fiscal deficits and the economic repercussions of the COVID-19 pandemic in 2020, along with Russia's 2022 invasion of Ukraine, have collectively contributed to the present high debt levels in the West African sub-region.\r\n\r\nFurthermore, the tightening of monetary policy in advanced economies, culminating in elevated nominal interest rates, has further compounded the debt burden in the region.\r\n\r\nWhile Ghana's high debt burden is undoubtedly a significant factor in its economic challenges, it is essential to recognize that these challenges stem from an intricate interplay of multifaceted issues. As the region endeavors to restore stability and growth, efforts to harness domestic resources, consolidate fiscal policies, and exercise spending restraint, offer hope of mitigating the excessive external debt accumulation."

"Ghana’s external debt to GDP ratio ranked the sixth highest in Africa"

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