Finance Lecturer at the University of Ghana Business School, Professor Lord Mensah has expressed fears that Ghana’s already dwindling investor confidence will further be exacerbated as government struggles to bring debt levels to a sustainable path.
The economist's comments come on the back of the International Monetary Fund’s (IMF) latest quarterly report which put Ghana as the leading borrower of IMF loans in Africa.
Prof. Mensah who attributes the development to Ghana’s continuous appetite for a balance of payment support from the IMF rather than funds for economically viable projects says the country risks being in an unfavourable position.
“I am not surprised at all because anytime we go to the IMF, we go for a bailout. Compared to other countries that borrow for a purpose and invest in areas where they can get the cash flows and repay the loan, Ghana borrows for balance of payment support whereby we do not see any physical activity.”
Per the report, Ghana’s debt at the IMF increased by 35 over the period under consideration which translates into 9.55 percent of the 17.68 billion Special Drawing Rights in total loans still owed by African countries to the Fund.
“This is debt information so anybody dealing with Ghana will be careful because the ability to pay dents is determined by the quantum of the money one owes. This ranking which puts Ghana as the highest IMF borrower in Africa means that if you are dealing with Ghana in terms of extending funds to, you will have to be careful and possibly if its Foreign Direct Investment, one will have to look at the debt will affect the stability of the exchange rate”, Prof. Mensah added.
Out of the five categories of largest outstanding loans as of July 31, 2023, Ghana's Special Drawing Rights (SDR) stood at $1.689 billion, higher than the $1.246 billion SDR recorded as of April 30, 2023.
Ghana had repaid SDR 8 million to the IMF as SDR 1 equals US$1.34294.