By Enyichukwu Enemanna
In what appears to be a reflection of Ghana’s perilous state of economy, the gold rich country has announced the suspension of payments on most of its external debt, including its Eurobonds, commercial loans and most bilateral loans, calling the decision an “interim emergency measure”.
The announcement by the Ministry of Finance on Monday comes amidst criticism by some bondholders on lack of clarity in the decision.
The government “stands ready to engage in discussions with all of its external creditors to make Ghana’s debt sustainable”, the finance ministry said.
The government had last week reached a $3bn staff-level agreement with the International Monetary Fund (IMF), resulting from the gloomy state of the economy. The IMF said a comprehensive debt restructuring is a condition of its support.
Already, the country had announced a domestic debt exchange programme and said that an external restructuring was being negotiated with creditors.
The country has been struggling to refinance its debt since beginning of the year after downgrades by multiple credit ratings agencies on concerns it would not be able to issue new eurobonds.
Its public debt stood at 467.4bn Ghanaian cedis ($55bn as per Refinitiv Eikon data) in September, of which 42 percent was domestic.
Accra had a balance of payments deficit of more than $3.4bn in September, down from a surplus of $1.6bn at the same time last year.
While 70 to 100 percent of the government revenue currently goes towards servicing the debt, the country’s inflation has shot up to as much as 50 percent in November.
Ghana has been experiencing what some say is its worst economic crisis in a generation.
Last month, more than 1,000 protesters marched through the capital Accra, calling for the resignation of the president and denouncing deals with the IMF as fuel and food costs spiralled.
