According to Minority Ghana has evolved into a precarious location for investments
The Minority in Parliament has issued a warning that Ghana’s substantial debt owed to the International Monetary Fund (IMF) has elevated its status as a risky destination for investments.
Ghana presently holds the position of being the most indebted nation to the IMF under the Poverty Reduction and Growth Trust, with an outstanding loan amounting to 1,689 billion Special Drawing Rights (SDRs). This constitutes nearly 10% of the total loans outstanding within the Trust.
Isaac Adongo, the Ranking Member on the Finance Committee of Parliament, expressed concerns over Ghana’s elevated debt levels and insufficient foreign reserves, which he believes are deterring foreign investments.
Adongo emphasized, “If you look at our creditworthiness in terms of our net international reserves to cover those portfolios, Ghana is a risky country and the IMF itself is worried.”
Furthermore, Adongo cautioned that Ghana may fail to qualify for another IMF program unless it improves its fiscal situation.
He stated, “But for the fact that Ghana has a track record of historically meeting its obligation to the IMF, these statistics alone [is enough] for you to know that Ghana will not qualify for an IMF programme.”
Ghana’s substantial debt levels are a major concern for potential investors, with the country’s public debt-to-GDP ratio surpassing 80%, and the government grappling with a significant budget deficit. This reliance on heavy borrowing to sustain government spending makes it challenging to alleviate the debt burden.
Ghana’s foreign reserves are also currently at a low level, covering less than one month of imports. This leaves the nation exposed to external shocks, such as fluctuations in commodity prices or currency depreciation.
The government is currently in negotiations for a new program with the IMF, expected to encompass measures aimed at reducing the budget deficit, stabilizing the economy, and fostering growth. However, it remains uncertain whether the government can successfully implement the necessary reforms to meet the criteria for this program.
