International credit ratings agency, Moody’s Investor Services, has projected Ghana’s total debt stock to reach 80 per cent of Gross Domestic Product (GDP) by the end of 2021.
According to Moody’s in its January 2021 Sub-Saharan Africa Outlook Report, Ghana’s economy will come under pressure with rising debts as the country will be ranked second in Sub-Sahara with the greatest vulnerability to external debt-stress pressure.
Despite the economic rebound in growth, Moody’s has said Ghana’s debt will continue to rise as the country’s borrowing requirements are high compared to its peers on the Continent.
Ghana’s debt to GDP has already crossed the dreaded 70 per cent of GDP placing it in the high-debt distress category and threatening the stability of the economy.
With domestic revenue mobilization expected to remain low, repayment of bilateral and multilateral loans will be difficult for the country.
According to the international rating agency, depreciation of the local currency – cedi- will add to the cost of debt loads and lower affordability of debts as more than 50 per cent of the country’s debt stock is held by external investors.
As the nation’s borrowing requirements rise amid wider financing gap and upcoming maturities, some debt market analysts have urged Ghana to take advantage of the G20 Debt Service Suspension Initiative (DSSI) to get some modest liquidity relief.
With the DSSI, bilateral loans with maturities that fall due within the programme will have a repayment period of 5 years.
Presently, Ghana’s debt stock stands at Ghs 283 billion, representing 71 per cent of GDP.