Ghana risks not receiving funding from IMF if debt levels are unsustainable – Dr. Acheampong

Mid-Year Review Budget

Policy Risk Analyst, Dr Theo Acheampong, says Ghana risks not receiving funding from the International Monetary Fund (IMF) should it be discovered that the country’s debt is unsustainable.

According to him, with the country being classified as a high debt distress country by the World Bank, it will be prudent if the managers of the country commence action on debt restructuring before the situation worsens.

Speaking on JoyNews’ PM Express, he said, “The IMF would only lend if they’re sure that a country’s debt is sustainable. And they have a statement on their website which I’d like to quote here again and it says that ‘for those countries that have unsustainable debt the IMF is precluded from lending unless the member takes steps to restore debt sustainability which includes debt restructuring.’

“And to determine whether your debt is sustainable or not, there are four bands that they will do in the DNC analysis. You’re either classified as being low-risk, moderate risk, high risk or in debt distress. And as of last year, when that DNC was done in July, we were already classified as being at high risk of both external and overall debt distress.


“So giving where we are now with the extra deficit and the extra spending I personally won’t be surprised if we move up into the next category already being in debt distress which then means that we will have to fundamentally commence a debt restructuring exercise before accessing the IMF financing.”

The Ranking Member on Parliament’s Finance Committee, Dr. Cassiel Ato Forson, on the other hand says the country’s debt situation has become unsustainable largely due to the government’s refusal to heed the warnings raised by the Minority.

According to him, the government had not been properly accounting for the country’s debt to GDP situation thus creating a false sense of security.

“And this is not a secret, I’ve debated it on the floor of Parliament, I’ve written articles to support the position of the Minority, we wrote even to IMF to get them to do what is right when Ghana was in a programme and yet the government decided to ignore us. So I’m not surprised at this report,” he said.

The World Bank has classified Ghana as a high debt distress country as it projects the nation’s debt to Gross Domestic Product (GDP) of 104.6% by the end of 2022.

According to its October 2022 Africa Pulse Report, debt is expected to jump significantly, from 76.6% a year earlier, amid a widened government deficit, massive weakening of the cedi, and rising debt service costs.

It is also forecasting debt to GDP of 99.7% and 101.8% of GDP in 2023 and 2024, respectively. The size of Ghana’s economy is estimated at about $72 billion, whilst it is expected to spend about 70% of revenue this year to service its debt.

The report is coming at a time the Bank and the International Monetary Fund (IMF) are conducting a Debt Sustainability Analysis on the country. A country which is highly debt distressed is unable to fulfil its financial obligations and therefore debt restructuring is required.

The World Bank further stated that Ghana needs $1.5 billion in assistance from the IMF, which could help to shore up public finances and regain access to credit markets.

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