It is now official, Ghana has fallen into the league of countries that might find it difficult to pay their debts on time, according to the IMF.
Joy Business in April this year reported that Ghana might be a few steps shy of being classified as a high-risk debt distress country given the country's documented debt position.
Responding to a question at a press conference in Washington DC, on the status of Ghana's 1billon Eurobond, IMF's Communication Director, Gerry Rice, said the borrowing should be done in a manner not to escalate Ghana's indebtedness.
“For countries at high-risk distress like Ghana, reducing the debt burden and associated vulnerability is a priority so the authorities have to be very selective with regards to new non-concessional borrowing since that can escalate.
“So Fund policies are flexible, they can accommodate some non-concessional borrowing if indeed it is intended to finance critical and profitable projects for which concession finances are not available”, he added.
The development could result in government's cost of borrowing going up substantially.
The country's public debt has hit 88 billion Ghana cedis as at March this year, representing about 67 percent of the total value of the economy which is now worth around 112 billion cedis.
Some economists are worried that Ghana could soon cross the dreaded 70 percent mark of debt-to-GDP ratio that could result in Ghana being also classified as Highly Indebted Poor Country (HIPC).
This projection is being made because government is set to issue another Eurobond in the coming months.
The government in response to criticisms that it is borrowing unsustainably, has insisted it is engaged in 'smart borrowing'.
Finance Minister Seth Terkper has repeatedly argued that the recent loans are being spent on self-financing projects, that is, the projects will pay for the loans.