Ghana’s external debt to Gross Domestic Product (GDP) ratio of about 39.5 percent in 2022 ranked it the sixth highest in Africa.

According to the African Development Bank 2023 West Africa Economic Outlook Report, Ghana’s external debt to GDP was higher than the West African average of 29.6%.

At the end of December 2022, Ghana’s external debt stood at $29.0 billion.

But among the 16 ECOWAS countries, the nation is the only one that is in debt distress.

It is therefore surprising because countries such as Cape Verde, Senegal and Niger that have high external debts to GDP are not in distress.

“In  West  Africa,  external  debt  accounts  for  the  largest  proportion  of  the  total  public  debt  portfolio in most countries except Nigeria and Togo–-  see  West  Africa  Economic  Outlook 2022  (AfDB,  2022).  External  debt  increased  from  an  average  of  13.8%  of  GDP  in  2014  to  29.6%  in  2022  External debt accumulation was facilitated by a rise in the issuance of Eurobonds. Eurobonds have been issued by Côte d’Ivoire, Ghana, Nigeria, and Senegal since 2011, and by Benin since 2019”, the report mentioned.

The AfDB 2023 West Africa Economic Outlook Report explained that the external debt accumulation was facilitated by a rise in the issuance of Eurobonds. This suggested that exchange rate depreciation as well as the current normalization of monetary policy across the world, were important risks for these countries.

It furthered that the key drivers of external debt dynamics in West Africa were the rapid exchange rate depreciation, especially in commodity-exporting countries as well as high primary fiscal deficits and weak economic growth caused by the COVID-19 pandemic in 2020 and Russia’s invasion of Ukraine in 2022.

“Higher nominal interest rates due to the current tightening of monetary policy in advanced economies has also contributed significantly to higher debt burden in the region. Projected higher economic growth and efforts to reduce the fiscal deficit through domestic resources mobilization, fiscal consolidation and spending restraint are expected to contain external debt accumulation in the region in the medium term”, it added.

Therefore Ghana’s economic challenges may not be only due to the high debt burden, but rather a myriad of issues.