Ghana Faces Significant External Debt Service Costs, Finance Minister Warns

Ghana’s Finance Minister, Cassiel Ato Baah Forson, reported significant external debt service costs expected to reach $8.7 billion over the next four years. Notable payments are scheduled for $2.5 billion in 2027 and $2.4 billion in 2028. Forson highlighted the lack of financial buffers to mitigate the debt burden as the country navigates an economic crisis due to multiple global factors.

On March 11, Ghana’s Finance Minister, Cassiel Ato Baah Forson, announced that the country would face substantial external debt service costs over the forthcoming four years. Forson indicated that total obligations would amount to $8.7 billion, which represents 10.9% of the nation’s Gross Domestic Product, with peak payments expected in 2027 and 2028.

Specifically, he noted that Ghana is required to pay $2.5 billion in 2027 and $2.4 billion in 2028. Forson expressed concerns that despite the looming domestic and external debt obligations, no financial buffers have been established to mitigate the impact of this extraordinary debt service burden.

Ghana is currently recovering from a severe economic crisis, which has been exacerbated by factors such as the COVID-19 pandemic, the war in Ukraine, rising global interest rates, and a trend of excessive borrowing. President John Dramani Mahama, who assumed office in January, has committed to revitalizing the economy and generating employment amid the rising cost of living, ongoing International Monetary Fund support, and a sovereign debt default.

In conclusion, Ghana’s Finance Minister has highlighted the country’s looming external debt obligations, which are projected to strain the economy significantly in the coming years. With critical payments due in 2027 and 2028, the absence of financial safeguards exacerbates the situation. As Ghana strives to emerge from a profound economic crisis, the government’s efforts to stimulate growth and manage these debts will be crucial.

Original Source: www.cnbcafrica.com