The idea that Ghana’s economic troubles are primarily a result of the Covid-19 pandemic and the Russian/Ukraine conflict has been dismissed by Fitch Solutions.
The research and market information company argues that Ghana’s debt had already reached concerning levels prior to these external shocks.
During a recent Sub Saharan Africa Macroeconomic Update, Senior Country Risk Analyst Mike Kruiniger stated that both external and internal factors had contributed to the country’s macroeconomic imbalances.
While acknowledging that the pandemic and war had exacerbated the situation, Kruiniger noted that Ghana’s debt servicing costs had been increasing rapidly prior to these events due to the government’s large-scale spending projects, including the restructuring of the banking sector and the provision of free secondary education to all citizens.
“I think the answer is, it’s been aggravated by the Covid-19 pandemic and the war in Ukraine. Those two are not the only cost to Ghana’s woes.”
“Ghana’s debt servicing costs were already rising pretty rapidly prior to the pandemic with the government having to work on pretty large scale of spending projects including restructuring of the banking sector and providing free secondary education to everyone in Ghana”, he explained.
Kruiniger also identified high borrowing on the international capital market as a key problem for Ghana.
He concluded that while the pandemic and conflict had played a role in Ghana’s crisis, they were not the sole causes of the country’s economic challenges.