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.”

Our newsletter gives you access to a curated selection of the most important stories daily.

Welcome to the Pulse Community! We will now be sending you a daily newsletter on news, entertainment and more. Also join us across all of our other channels - we love to be connected!

Eyewitness? Submit your stories now via social or:

Email: news@pulselive.co.ke

Recommended articles

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

Mathias Pogba brands Paul Pogba 'a so-called Muslim steeped in witchcraft' amid fetish claims about Kylian Mbappe

Mathias Pogba brands Paul Pogba 'a so-called Muslim steeped in witchcraft' amid fetish claims about Kylian Mbappe

Referee behind chaos at AFCON was rushed to hospital after match

Referee behind chaos at AFCON was rushed to hospital after match

Ne-Yo speaks out after wife Crystal announced end of their 8-year marriage

Ne-Yo speaks out after wife Crystal announced end of their 8-year marriage

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

Sadio Mane the odd one out as Bayern Munich stars take team photo with glasses of beer

Sadio Mane the odd one out as Bayern Munich stars take team photo with glasses of beer

Africa's richest man, Aliko Dangote, adds extra $915 million to his vast wealth in Q1 2022

Africa's richest man, Aliko Dangote, adds extra $915 million to his vast wealth in Q1 2022