Akufo Addo Drags Ghana To Lower Income Developing Country ——–IMF blames High Debt TO GDP

The International Monetary Fund (IMF) on its website has officially categorised Ghana as a “Lower Income Developing Country” with the country recording extremely hopeless macro-economic indicators, such as debt to Gross Domestic Product (GDP) projected to hit 81.5% by the end of 2021.

In its April 2021 Fiscal Monitor surveys analyses the latest public finance of economies, the IMF ranks Ghana among low-income developing countries such as Madagascar, Benin, Nigeria, Papua New Guinea, Yemen, Zambia, Zimbabwe, Afghanistan, among others.

In total, there are 59 Lower Income Developing Countries under which Ghana falls, 39 advanced economies, and 96 emerging market and middle-income economies.

According to the IMF data, Ghana’s revenue as a percentage of GDP is one of the worst globally, at 13.13 when the cut-off mark for countries categorised as low-income developing countries was 13.78% of GDP.

In its latest annual Fiscal Monitor, a copy of which is in the possession of Whatsup News, Ghana recorded the worst accounting practices in keeping with its overall fiscal balance. Ghana scored a “C” alongside Afganistan, Chad, Haiti, Benin, Bangladesh, etc.

In that same category, DR Congo, Ivory Coast, Niger, Ethiopia and Cambodian scored an “A” in their transparency index for fiscal behaviour.

The IMF predicts even more doom for Ghana’s economy by estimating that by 2025, its debt to GDP ratio will hit a staggering 86.6%.

This means the Akufo Addo administration in four years has succeeded in dragging Ghana down from a Middle Income Developing Country to its current shameful position in the global league of countries.

The Akufo Addo administration in the past four years had exhibited an insatiable appetite for debt, by racking up more debt than all the previous administrations since independence combined. 

By the close of this year, the government would have spiked Ghana’s public debt to GH¢300 billion.

Per the IMF data on low-income developing countries, Ghana’s debt to GDP ratio will surge to 83.2% in 2022, and then further to 84.8%, 86.0% and 86.6% in 2023, 2024 and 2025 respectively. It will however drop slightly to 85.5% in 2026.

Already, Ghana has crossed the high debt distress country mark, with its debt to GDP nearing 78% against the cut-off mark of 70%.

Despite its strong criticism of the previous administration of the erstwhile National Democratic Congress (NDC) for its own debt guzzling, the Akufo Addo administration has gulped up twice more debt than the NDC in four years than the entire eight-year rule of the NDC.

The government is planning to hit the international capital market this year to raise a US$5 billion Eurobond. This will bring its tally to a whopping US$ 16 billion in just 5 years. Already, the government had floated Eurobonds totalling some US$11 billion in the past four years.

Comparatively, the John Mahama-led NDC did US$3.5 billion eurobonds between 2013 and 2016. Prior to that, the John Agyekum Kufuor administration only US$ 750 million in its entire lifespan. Together, the NPP administration of Kufour and that of the NDC in approximately 16 years floated US$ 4.25 billion Eurobonds, while the Akufo Addo administration has racked up twice that amount in just four years.

Critics have questioned the motive of this unbridled Eurobond issue by the Akufo Addo administration, particularly given the fact that the private company of the Finance Minister, Ken Ofori-Atta is one of the main brokers of these deals.

According to former President Mahama, there is a motivation for the Finance Minister to compel the government of his uncle, President Akufo Addo to contract more debt through the Eurobonds because every deal that is sealed, his company, Databank Financial Services smile to the bank with fat commissions and fees.

Meanwhile, Ghana’s total public debt stock reached an all-time high of GH¢291.6 billion in December 2020, approximately 76.1% of GDP, the Bank of Ghana said.

According to the figures, external debt alone stood at GH¢141.8 billion, approximately US$24.7 billion. This is also equivalent to 37.0% of GDP.