Ghana’s Finance Minister Warns of Significant External Debt Service Burden
Ghana’s Finance Minister highlighted an impending external debt service of $8.7 billion over four years, peaking significantly in 2027 and 2028. There are no buffers to absorb this debt burden as the country recovers from a severe economic crisis.
Ghana’s Finance Minister, Cassiel Ato Baah Forson, announced that the nation is facing substantial external debt service costs projected at $8.7 billion over the next four years, approximately 10.9% of GDP. He emphasized that the highest payments will occur in 2027 and 2028, with $2.5 billion due in 2027 and $2.4 billion in 2028 during his inaugural budget speech to parliament.
Minister Forson noted that despite the significant forthcoming debt obligations, no financial buffers have been established to mitigate this unprecedented debt service burden. Ghana is currently recovering from its most severe economic crisis in a generation, exacerbated by the COVID-19 pandemic, the war in Ukraine, rising global interest rates, and a history of excessive borrowing.
President John Dramani Mahama, who began his term in January, has pledged to revitalize the economy and generate employment opportunities amid a prevailing cost-of-living crisis. His administration is grappling with challenges including an ongoing International Monetary Fund bailout and a sovereign debt default in this cocoa and gold-producing country.
In summary, Ghana is confronted with a hefty external debt service burden, requiring $8.7 billion in the next four years, particularly in 2027 and 2028. The absence of financial reserves to address this obligation poses significant challenges for the nation as it grapples with a multifaceted economic crisis. President Mahama’s commitment to economic recovery is critical amid these difficulties.
Original Source: www.cnbcafrica.com
