Moody's projects Ghana's debt-to-GDP to hit 65 percent by 2023, here's why

Moody’s, an international rating agency has projected Ghana’s debt-to-GDP (Gross Domestic Product) ratio to hit 65% by the year 2023.

Ghana's finance minister Ken Ofori Atta

According to international rating agency Moody’s, Ghana’s debt will rise primarily due to an annual assumption of 2% of GDP in the form of contingent liabilities.

Moody's’ forecast also includes disbursements under the $2 billion financing deal with Sinohydro – an infrastructure financing deal that is collateralised by the country's yet-to-be-mined and refined bauxite resources.

This is at an assumed annual execution rate of about $100 – $200 million in the funding requirements and in the debt ratio.

The government is contemplating issuing additional ‘collateralised' debt to support investment in bauxite refining in part to absorb surplus energy, Moody’s said.

“As a result, the debt burden has risen by nearly 10 percentage points of GDP since 2017, in part as a consequence of the financial sector bailout in 2018-19 and the measures taken to clear legacy power utility debts (estimated at 4.5% and 2% of GDP, respectively).”

Estimated at around 64% of GDP at the end of 2019, Moody’s said it is expected to rise further over the next term.

Adding that “How far and for how long it rises will depend in part on the government's success in preserving exchange rate stability and in dealing with additional contingent liabilities arising in the energy sector.”

JOIN OUR PULSE COMMUNITY!

Unblock notifications in browser settings.

Eyewitness? Submit your stories now via social or:

Email: news@pulselive.co.ke

Recommended articles

Africa’s richest man Aliko Dangote seeks to raise an additional $1.1 billion to complete his refinery project by 2023

Africa’s richest man Aliko Dangote seeks to raise an additional $1.1 billion to complete his refinery project by 2023

5 African countries with the cheapest gas prices in 2022

5 African countries with the cheapest gas prices in 2022

8 African countries where Rihanna plans to launch her luxury Fenty Beauty products

8 African countries where Rihanna plans to launch her luxury Fenty Beauty products

20 African countries with the most expensive average prices of mobile data

20 African countries with the most expensive average prices of mobile data

Africa’s richest man Aliko Dangote poised to overtake another Russian billionaire Vladimir Lisin on Bloomberg billionaires list

Africa’s richest man Aliko Dangote poised to overtake another Russian billionaire Vladimir Lisin on Bloomberg billionaires list

Mzee Kibor's will made public, revealing how vast wealth and millions will be distributed

Mzee Kibor's will made public, revealing how vast wealth and millions will be distributed

Ini Edo posts new photos amid reports of welcoming a baby through surrogacy

Ini Edo posts new photos amid reports of welcoming a baby through surrogacy

Referee behind chaos at AFCON was rushed to hospital after match

Referee behind chaos at AFCON was rushed to hospital after match

Eddie Butita speaks on his fallout with Miss Mandi, offers her a job

Eddie Butita speaks on his fallout with Miss Mandi, offers her a job