Ghana at Risk of Debt Default, Main Opposition Leader Warns
(Bloomberg) -- Ghana's main opposition leader and former president warned that West Africa's second-largest economy is at risk of defaulting on its debt unless “something drastic is done.”
Total public debt increased to 351.8 billion cedis ($46.7 billion), or 76.6% of gross domestic product, at the end of last year, from 291.6 billion cedis, or 74%, at the end of 2020, according to data from the Ministry of Finance. It stood at almost 380 billion cedis at the end of the first quarter, John Mahama, the head of the National Democratic Congress said in a lecture on Monday. Annual debt service costs have risen five-fold to about 50 billion cedis since 2016, he said.
“More than half of what government collects in taxes is used to service debt, with the remainder going almost exclusively into public-sector wages,” Mahama said. “The effect of this, is that government is unable to meet its spending obligations in the most critical sectors of the economy on which the livelihoods of millions of our people depend.”
He urged President Nana Akufo-Addo to sack his finance minister, reshuffle his cabinet, reduce expenditure and overhaul the Economic Management Team to deal with soaring debt. The government in March said it would deepen spending cuts to achieve its budget deficit targets, and it recently started collecting a tax on electronic payments.
The new tax is unlikely to make a significant contribution in resolving the nation's problems and will have an adverse effect on Ghana's people, Mahama said.
The opposition leader's comments add to mounting pressure on the government to do more about Ghana's worsening economic outlook and high living costs. On Sunday, the Trade Unions Congress called on the government to scrap taxes on gasoline and diesel until crude prices and the cedi stabilize, and for public sector workers to be given a 20% cost of living allowance.
The inflation rate has surged to 19.4%, a more than 12-year high, and interest rates have risen by 350 basis points since November. The cedi is the worst-performing African currency against the greenback this year, depreciating by 19%, and dollar-denominated government debt is trading at distressed levels.
Mahama seeks to lead the NDC to victory in the 2024 polls after losing to Akufo-Addo of the New Patriotic Party in the 2016 and 2020 votes.
©2022 Bloomberg L.P.
-
Signature Play: The Classic Cocktail Is Dead. Or Is It?
Classic cocktails are disappearing from India's cocktail menus. But they're still being ordered, taught to bartenders and borrowed from. So, who's really having the last drink?
-
A New Samvat Wishlist: Inclusive Prosperity And Human Development
India has strengthened its economic foundations through infrastructure, digital access and enterprise. Its next growth chapter must deepen productivity, create better livelihoods and widen participation in prosperity.
-
Love, Sex Aur Dhokha: The Audacious Plot To Spy On Jensen Huang
A Taipei dinner, a Singapore chip buyer and a suspected Chinese asset: inside the alleged spy operation that got close to NVIDIA's Jensen Huang.
-
Ten Things I Learnt This Samvat
Patience can be a trap. Cheap stocks can stay cheap. Leverage can wipe you out. What did Samvat 2082 teach us? Niraj Shah writes on 10 lessons from the year gone by.
-
Talking Points This Week: Tech Nerves, FII Buying, And A Faraway Banking Shock
The global markets are not shining this Diwali. The exception in the large markets is, India.
-
Midterm Rally Lasted A Day. The Hard Reality Of A Divided US May Last Two Years | Opinion
Between a contested AI boom, a debt ceiling that arrives in 2027 and a president with every incentive to act alone, the next two years may prove more volatile than the first day's rally suggests.
-
Blue Wave Will Derail the AI Trade but Won't Dismantle the AI Era | Unhedged Position
The Democrats' sweep of the US Congress will see politics collide with economic forces both over the long and short term.
-
It's Time To Take The GST Council's Bet On Trust Global
Payment records can prove India's services exports, and clear, proportionate rules can bring foreign digital sellers into the tax net.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
