Former President John Dramani Mahama declared that Ghana is currently on the verge of being declared bankrupt in a Chatham House lecture on Friday. He stated that the nation is burdened with a debt it cannot pay and that the government has defaulted on servicing both external and domestic debt.
Mahama expressed concern over the controversial debt restructuring program, which could potentially wipe out the middle-class of Ghana if plans to forfeit the proceeds of government bonds, relied upon for investment and sustenance, are followed through. He estimated that up to six million people could lose their life savings and investments, and the banking and financial sector could face insolvency if no adjustments are made to the restructuring plans.
The former president noted that the current economic situation contrasts with Ghana’s fortunes a little over a decade ago, when it posted some of the highest growth rates in the world with a robust non-oil sector. Despite approaching 66 years of nationhood, Mahama stated that the country is facing its worst economic situation in decades.
“We will mark this day under the yoke of the worst economic situation in decades,” he added.
Reasons for Ghana’s bankruptcy
One of the reasons why Ghana is bankrupt is that Ghana owes China some $3.5 billion, this is partially as Ghana has been seeking financing for its infrastructure projects, such as roads, ports, and power plants, and China has provided substantial loans for these projects. Two of China’s biggest African debtors, Zambia and Ghana, have stopped some payments. Together they are in debt to China for more than $15 billion, according to Chatham House researchers. In total, African nations owe China about $84 billion.
