Africa’s Debt Crisis needs a Political Fix, contend experts

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By Meera Srinivasan, on IDEAs, 20 April 2024

Ghana’s women vendors and hawkers are hard to miss. Attired in bright colours and bold prints, they walk swiftly on capital Accra’s streets, bearing baskets with various items on their heads, as infants wrapped in cloth carriers sit clasping their shoulders. As key contributors to the country’s informal economy, the women make a fine balancing act look easy.

Their labour, like scores of fellow Ghanians’, is crucial not only for finding incomes for their families, but also for helping rebuild the country’s fragile national economy. In December 2022, Ghana defaulted on most of its $30 billion foreign debt, as its economy crashed. The government is currently grappling with creditors to restructure its debt. It is yet to secure a “workable debt deal” with bond holders.

Ghana, like several other African countries, is neck-deep in debt and stifled by its repayment schedule. Addressing the Paris Club in June last year, African Development Bank Group President Akinwumi A. Adesina said external outstanding debt service payments for 16 African countries rose to $22.3 billion in 2023, significantly burdening government revenue. For the median sub-Saharan African country, the loan interest to revenue ratio has doubled in the past decade to 11 % a rate almost four times higher than in advanced economies, according to a 2023 International Monetary Fund publication.

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