#Other countries : The rating agencies multiply the warnings on the Ghanaian debt. The country is among those that present enormous risks of payment default on the African continent, its external reserves only ensuring 2 months of imports of goods and services.
After Moody’s (CAA1/High risk rating) last February and Standard & Poor’s (rating downgraded to CCC+/High risk) at the beginning of August, it is around Fitch Ratings to alert, on August 10, on the risk of payment default from Ghana. The US rating agency downgraded the country’s credit rating from “B-” to “CCC”, placing the country in the highly speculative category.
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Clearly, Ghana is virtually unable to repay its debt service. Fitch justifies this downgrading of the country’s rating by “the deterioration of public finances, the significant drop in external liquidity and international reserves estimated at 7.6 billion dollars in June 2022, now covering only 2 months of imports of goods and services”.
Consequently, Accra will find it difficult to get out on the international debt market to borrow resources it needs to meet its financing needs. And in case it gets financing, it will be at very high interest rates. This means that the risk of non-payment is real. Moreover, last July, Fitch Ratings had already placed Ghana on its list of 17 countries in default of payment or at risk of being so. Three other African countries were included: Ethiopia, Tunisia and Zambia.
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To get out of this situation, the Ghanaian leaders, who had for some time announced the end of requests from the International Monetary Fund (IMF), ended up asking once more for the support of the Breton Woods institution for the implementation of a plan safety. A loan agreement has recently been signed and funds might be released before the end of the year, in the event that the two parties agree on the reforms to be undertaken, which will provide a breath of fresh air to the economy. Ghanaian. This rescue plan should lead to a disbursement of 3 billion dollars.
The new IMF loan would make it possible to increase the country’s foreign exchange reserves, to meet debt service, which should reach 2.75 billion dollars for 2022 and 2.8 billion dollars in 2023, by allowing the countries to be able to exit on the international debt market. According to Fitch, as a result of this agreement, Ghana will be able to meet its debt obligations thanks to the IMF loan, a loan from the African Export-Import Bank, a syndicated loan from international commercial banks …
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However, in the event that a definitive agreement with the IMF is not recorded, Ghana will be forced to dip into its already weak foreign exchange reserves to repay its debt service with enormous risks of payment for its imports of goods and services. .
Ghana is hard hit by the crisis with inflation currently around 28%, despite the interventions of the country’s central bank, which has raised its key rate several times to curb soaring prices. Ghana’s public debt currently stands at 84% of GDP, well above the 70% threshold set by ECOWAS.
