World's Poorest Country 'Gana' Announces Suspension of Debt Repayment... Is Default Imminent?

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Lee Ji-eun] Ghana, one of the poorest countries in the world, has announced a suspension of external debt repayments, Bloomberg reported on the 19th (local time).

According to the media outlet, Ghana's Ministry of Finance stated in a press release that it would suspend repayments on external debts, including $13 billion (approximately 17 trillion KRW) in Eurobonds and bilateral loans. The Ministry added, "We are prepared to negotiate with all external creditors to ensure Ghana can sustainably manage its debt."

This decision comes amid ongoing discussions with the International Monetary Fund (IMF) regarding bailout procedures. Earlier, on the 12th, Ghana agreed with the IMF through working-level talks to receive $3 billion in support under the Extended Credit Facility (ECF) with a three-year maturity. The IMF stated, "Funds will be provided aiming to stabilize Ghana's macroeconomy and restore debt sustainability," and added, "Ghana's authorities have committed to debt restructuring alongside comprehensive economic reforms."

Market concerns have been raised that Ghana's restructuring may not proceed smoothly, potentially leading to a default declaration. Major foreign media described the debt repayment suspension as reflecting Ghana's precarious economic situation, effectively placing the country in default. Swiss asset management firm Pictet, which holds Ghanaian bonds, also commented, "We expected Ghana to continue servicing its debt during the restructuring process," and noted, "The market's expectations regarding the restructuring were mistaken."

Ghana is currently experiencing a severe economic crisis, with inflation reaching 50% last month. As of June, Ghana's total external debt stood at approximately $28 billion. The IMF predicts Ghana's external debt-to-GDP ratio will reach 90.7%. The World Bank estimates this ratio at 104%, classifying Ghana as a high-risk country for debt crisis. Ghana is currently using 70-100% of its revenue to repay debt, indicating a dire fiscal situation.

In addition, political turmoil is intensifying, with around 1,000 protesters demanding the president's resignation in anti-government demonstrations last month.

This content was produced with the assistance of AI translation services.