The World Bank has cautioned Ghana that it may pay a price if external or domestic shocks hit the economy, due to the rising debt.
According to the Country Director for Ghana, Pierre Laporte, the nation which is now classified as highly debt distress is following a dangerous path.
He however believes a higher growth rate or expansion in the economy can somehow help reduce the rising debt levels to some extent.
Speaking on an Accra based radio station, Class FM, Mr. Laporte said “what the latest figures show is that Ghana’s debt-to-Gross Domestic Product ratio is close to 80%, about 78%. It should be noted that before Covid-19, it was a bit lower than that, but was in the high 60’s; so Covid-19 has contributed to the debt of Ghana like every country in the world. What we’re saying is that Ghana is at high risk of debt distress”.
“What this means is that Ghana is more at risk of going to default or distress, if certain things happen. For instance, Ghana depends on oil so if oil prices were to crash, this will put Ghana at a more uncomfortable position vis-à-vis payment of its debt”, he pointed out.
Continuing, he said “If gold prices or commodities Ghana export go down, if for whatever reason domestic revenue, which are already very low, go so low because of a shock, then Ghana will have trouble fully servicing its debt”, he indicated.
Ghana’s public debt stock hit ¢332 billion in May 2021, after going up by about ¢27.8 billion between April 2021 and May 2021, data from the Bank of Ghana revealed.
This is equivalent to 76.6% of GDP.
Pierre Larporte however laid to rest the argument that Ghana’s economy before Covid-19 was strong, saying, before the emergence of Coronavirus, Ghana was one of the highest growing economies in Africa and still recorded a positive growth last year.
According to him, the economic recovery from the Coronavirus pandemic has also been strong
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