Ghana ranked 2nd by Bloomberg with highest default risk in 2022

Ghana has been ranked 2nd by Bloomberg among countries with the highest default risk in 2022.

The country closely follows El Salvador (ranked number one) in the Sovereign Debt Vulnerability Ranking.

Indeed, Ghana’s debt to Gross Domestic Product (GDP), according to Bloomberg, is estimated at 84.6% by the end of this year.

This indicates that the nation’s debt will have gone pass ¢400 billion by far before the end of 2022.

As of the first quarter of 2021, Ghana’s public debt hit ¢391 billion (US$50.3 billion), the Bank of Ghana reported. ¢40.1 billion was added to the debt stock, largely as a result of exchange rate fluctuation.

Together with Brazil, Ghana’s interest expense to GDP at the end of 2022 is projected to hit 7.2%, the highest among the 25 countries, captured by Bloomberg.

This means the two countries will spend more money to service their debt in 2022.

Already, the International Monetary Fund has cautioned that more than 30% of emerging and developing countries are at or near debt distress, with 60% from developing economies.

According to Bloomberg, Tunisia with a debt-to-GDP ratio of 87.3% is ranked 3rd among countries that are in the risk of debt default.

It is followed by Pakistan (4th), Egypt (5th), Kenya (6th), Argentina (7th), Ukraine (8th), Bahrain (9th) and Namibia (10th).

Ghana’s situation prior to announcement by the government to seek IMF bailout was precarious as investors perceived the Ghanaian economy as risky, therefore escalating the yield on Ghana’s Eurobonds.

However, the market has remained calm with interest rates relatively stable since the announcement by the government to seek economic support from the Fund, though there are still some concerns about the foreign exchange market.