Oil-rich Ghana in 2019 was dubbed fastest growing economy on earth but now drowning in debt

Dec 25, 2022 News

West African nation offers a scary lessons for Guyana…

By Kiana Wilburg

Kaieteur News – The glory days of Ghana’s offshore oil operations can be traced back to December 2010. The West African nation began pumping oil from its first commercial discovery in its Jubilee Field. Those operations delivered US$1B in earnings annually to the State.

Nine years later (in 2019), Ghana was dubbed to have the fastest-growing economy. It was also praised for the steps it took to improve the regulation of the industry. In fact, Ghana was seen as a champion of growth for other nations within the continent and further afield to follow.

But in a matter of three years, this glimmering picture of marvelous economic management was unexpectedly obliterated. Ghana moved from riding a wave of meteoric growth to now wallowing in the abyss of indebtedness. From 2019 to 2022, the country that was once paired with Guyana as a model state on good governance is now a lesson on the perils of the oil curse.

International media reports released this month said Ghana is in such a worrying state of debt distress, that it has been forced to suspend payments on most of its external debt. In fact, its Finance Ministry said it will not service selected external debts including its Eurobonds, commercial loans and most bilateral loans.

Ghana’s Ministry said: “Ghana is today faced with major economic and financial crisis and its attendant social challenges. In 2020 and 2021, the Covid-19 pandemic negatively impacted our fiscal and economic situation. Global risk aversion triggered large capital outflows, a loss of external market access and rising domestic borrowing costs.”

“This year, 2022, the global economic shock induced by the Russian invasion of Ukraine has further adversely affected our economy just when it was beginning to recover from the pandemic. The combination of adverse external shocks has exposed Ghana to a surge in inflation, a large exchange rate depreciation, and stress on the financing of the budget. These factors taken together have put the sustainability of our debt at risk.”

It was also keen to note that, “such emergency measures are necessary to prevent a further deterioration in the economic, financial, and social situation in Ghana.”

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