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Ghana is rich in resources, to be debt distressed is surprising – Adongo

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Development Economist, Dr. Michael Adongo has expressed some surprise about Ghana’s current debt levels.

It would be recalled that Ghana has been classified among 10 countries globally by CFR Sovereign Risk Tracker that are at risk of debt distress.

The country scored a mark of 10, meaning it has a 50% or higher chance of defaulting in the next five years.

This is coming after the nation’s debt reached an alarming level of ¢391 billion as of quarter one, 2022, approximately 78% of Gross Domestic Product (GDP).

The nine other countries alongside Ghana captured by the CFR Sovereign Risk Tracker are Argentina, Lebanon, Pakistan, Russia, Sri Lanka, Tunisia, Ukraine, Venezuela and Egypt.

Egypt is the only country with slightly below 50% chance of defaulting in its sovereign loans.

Interestingly, Ghana is the only Sub-Saharan African country among the 10 countries. However, there are Tunisia and Egypt from the African continent.

Per the data, Ghana’s short term debt and current account situation is equivalent to 79% of its reserves, whilst the current account and fiscal balance to GDP for 2022 are estimated at a deficit of 3.6% and 8.4% respectively.

The International Monetary Fund had already stated in its April 2022 Fiscal Monitor that Ghana’s public debt stock is not going to take a nosedive anytime soon as it’s expected to hit 84.6% of GDP by the end of 2022.

Speaking on A1 Radio’s Day Break Upper East Show on the back of these developments, Dr. Adongo explained that the managers of the economy have at every turn failed to pay heed to sound counsel.

“I am surprised that Ghana is in the midst of countries that are largely driven by commerce and small export sectors. Ghana is a very resource-rich country and should not find itself in that situation,” he said.

As to whether Ghana runs a risk of default, Dr. Adongo said “that is not new. I remember somewhere last year, i did indicate that given the level of our exposure to the US economy, any interest adjustment by Federal Reserve and any further deterioration of the US economy would affect us.”

“That is because of our desire to borrow unbridled; to go on to take loans even though they have not reflected in the economy and we have not invested in productive sectors of the economy. All the resources we have taken have gone into non-productive areas.” he said.

Dr. Adongo explained while defaulting on debt is worrying, it is even more worrying that the government could be defaulting on domestic debt.

Source: A1radioonline.com|101.1MHz|Mark Kwasi Ahumah Smith|Ghana

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