The report said that Ghana just like some other sub-Saharan Africa countries which have taken to the Eurobond market to finance their deficit faces some debt vulnerability risk.
Ghana could be in a debt crisis if her Eurobond is not invested wisely according to IMF report
The latest Fiscal Monitor report by the International Monetary Fund (IMF) has cautioned the Ghanaian government that a debt crisis looms if non-concessional borrowing like Eurobonds are not invested into profitable projects that help in the repayment process.
“Continued reliance on non-concessional financing in many countries (Co?te d’Ivoire, Ethiopia, Ghana, Kenya, Senegal) could add to their debt vulnerability if the proceeds are not properly managed to generate growth and repayment capacity,” the latest Fiscal Monitor report warned.
The report added that the ongoing public financial management reforms could help countries like Ghana to increase their resource envelope especially as they reduce wastage.
“Reducing off-budget activities (for instance in China and Ghana) could improve the monitoring of debt levels and fiscal risks, lead to more prudent debt strategies, and promote transparency,” the Fiscal Monitor said.
Speaking at the press briefing after the report’s launch, Victor Gaspar-Director of IMF Fiscal Affairs Department, said with global growth slowing and uncertainty rising, fiscal policy should prepare for possible downturns.
He said that countries must put in place measures to adapt to a fast-changing global economy.
“To foster higher and more inclusive growth, fiscal policy should adapt to key trends reshaping the global economy. Shifting demographics, rapid technological progress, and rising global economic integration bring structural challenges,” he added.
Ghana’s first entrance to the Eurobond market was in 2007. Ghana has since been to the market seven times – with the latest a US$3bn bond sold in three parts with average maturities of seven, 12 and 31 years.
The 2019 budget in which government first announced plans to raise US$3billion from the international capital markets, indicated that about US$2billion will be used to execute this year’s budget while the remaining US$1billion is used to refinance 2023, 2026 and 2030 Eurobonds.
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