Business News of Tuesday, 5 July 2022
Source: www.ghanaweb.live
2022-07-05Ghana’s macroeconomic stance in imminent danger – World Bank
Pierre Laporte, World Bank's Country director
Ghana’s macroeconomic outlook faces significant risks, World Bank
Ghana seeks IMF bailout
The country needs to address its debt challenges, World Bank cautions
The world bank says Ghana’s economic stance is facing serious risks forcing the government to seek a bailout from the International Monetary Fund.
According to its 6th Ghana Economic Update, copied by
Read full articlemyjoyonline, the country’s low levels of revenue generation and shortfalls from the private sector are accounting for its deteriorating economy.
It maintained that the country’s economic challenges are as a result of high expenditure and rising debt rates, coupled with the increasing effects of the Covid-19 pandemic and the Russian-Ukraine war.
Ghana currently has more debt challenges and a higher inflation than most Sub-Saharan African countries.
“Ghana’s revenue efforts have been lower than her peers (Sub-Saharan African countries) for several decades; inflation has surged at rates higher than peers. Ghana has recently had more fiscal and debt challenges than her peers”, it added.
The overall fiscal deficit went up to 15.2% of Gross Domestic Product in 2020 and was still high at 11.4% of GDP in 2021. The fiscal deficit at the end of the first quarter of 2022 stood at 11.3%, the deficit was in target.
The world bank also added that the macroeconomic growth of the country will face serious risks going forward if the country fails to address its debt challenges.
“Growing reliance on domestic capital markets for financing could drive up interest rates, limit access to credit by the private sector, and put a strain on the financial sector. Fiscal slippages would significantly threaten debt sustainability. Higher than expected inflation and exchange rate pressures could hurt the recovery and put pressure on international reserves”.
Meanwhile, the World Bank is advising the government to cut down its expenditure consumption and implement aggressive revenue mobilization policies to salvage its economy.
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