Ghana remains at high risk of debt distress – AfDB

The African Development Bank (AfDB) says Ghana remains at high risk of debt distress with a debt-to-GDP ratio of 77.5% in September 2021, against 76.1% in December 2020.

In its 2022 African Economic Outlook report, it said fiscal deficit will narrow from 15.2% of GDP in 2020 to 12.1% in 2021, due to increased revenue collection.

The  current  account  deficit,  it also said, is estimated  to have  narrowed to 2.1% of GDP in 2021 from  3.1% of GDP in 2020,  given the  merchandise trade  surplus.

Foreign exchange reserves also increased from $8.6 billion in December 2020 to $9.7billion in December 2021 (4 months of imports).

Again, the  banking  sector  remained  strong  in  2021  with  a  capital-adequacy  ratio  of  20.8%  at  end-June  2021,  nearly  double  the  regulatory  minimum  of  11.5%.

Poverty declined from 12% in 2020 to 11% in 2021, given GDP per capita growth of 2.3%, from a contraction of 1.7% in 2020. However, unemployment increased by 2.3percentage points to 13.4% in 2015–21.

The country has committed the SDR allocation of $1billion to finance the 2022 budget deficit $1billion to finance the 2022 budget deficit.

Outlook and risks

AfDB said the outlook of the Ghanaian economy remains positive, with projected Gross Domestic Product (GDP) growth of 5.3% and 5.1% in 2022 and 2023 supported by the Ghana COVID-19 Alleviation and Revitalization of Enterprises Support Programme. Potential inflationary pressure exists due to increased energy and food prices associated with the impact of the Russia-Ukraine war.