New York Times report: Ghana is bankrupt

nana

According to a report from The New York Times, the Ghanaian government has faced financial difficulties and declared bankruptcy as it failed to make payments of billions of dollars owed to foreign creditors in December. The paper pointed out that in response to this situation, President Nana Akufo-Addo’s administration had to accept a $3 billion loan from the International Monetary Fund (IMF), which is often seen as a last resort for financial support. This development highlights Ghana’s severe financial crisis, with government bodies having substantial debts to contractors and a growing debt crisis.

Emmanuel Cherry, the CEO of an association representing Ghanaian construction companies, disclosed that the government owed contractors an astonishing 15 billion cedis, which is approximately $1.3 billion, without accounting for interest. This has had wide-ranging repercussions, including layoffs by many contractors, exacerbating the country’s unemployment issue. Additionally, the Ghanaian government reportedly owes independent power producers $1.58 billion, and there is a looming threat of nationwide power outages.

The report characterized the government as essentially bankrupt and noted that this marks the 17th time Ghana has had to turn to the IMF for assistance since gaining independence in 1957. The current crisis is attributed in part to the impact of the COVID-19 pandemic, Russia’s invasion of Ukraine, rising food and fuel prices, and government mismanagement.

The escalating debt burden for developing nations, estimated to exceed $200 billion, was a prominent topic of discussion at the 78th United Nations General Assembly.

The IMF is expected to present a comprehensive rescue plan to address Ghana’s debt situation, focusing on fiscal discipline, revenue enhancement, and safeguarding vulnerable populations while engaging with foreign creditors.

Ghana had previously received IMF assistance in 2015, leading to a rapid economic rebound and making it one of the world’s fastest-growing economies. During this time, the country invested in infrastructure, education, and banking industry reforms. The report acknowledged that the recent IMF loan has helped stabilize the economy by reducing currency fluctuations and restoring some confidence. Although inflation remains high, it has decreased from its peak in January when it reached 54 percent.

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