Ghana seeks to restore its reputation
The past few years have been a wake-up call for Ghana, long seen as one of sub-Saharan Africa’s brightest hopes. By 2015, two decades of strong and inclusive growth had been undermined by soaring public debt and widening twin deficits. Some negative factors were external by nature but others, including irresponsible state borrowing, were all of its own making.
When the IMF approved a $918m bailout in April 2015, it said “large fiscal and external imbalances” had put Ghana’s medium term prospects at risk. And the nation’s finances were worse than anyone feared — even the Washington-based multilateral. When President Nana Akufo-Addo came to power in January 2017, his team found a previously undeclared $1.6bn hole in the state’s finances.
One of the president’s first and best moves was to appoint Ken Ofori-Atta, a wily financier who worked at Morgan Stanley and Salomon Brothers before setting up Databank, widely seen as one of Ghana’s best investment banks.
Ofori-Atta set out to shore up the nation’s finances and restore its tattered reputation among global investors. In May 2018, Ghana sold $2bn worth of 10 year and 30 year Eurobonds, with total books passing the $5.5bn mark. The government said $750m would be allotted to its 2018 budget, with the rest used to refinance debt. Ghana printed a total of $200m in local currency bonds in June and July; and in September, it secured a boost to its finances and reputation when Standard & Poor’s raised its credit rating a single notch to B from B-, its first upgrade in nearly a decade. In the future Ghana aims to raise $10bn by issuing a 100 year bond to broaden its manufacturing base and wean itself off international aid.
Despite having been in office for less than two years, Ofori-Atta has proven both capable and, when necessary, proactive, promising in July 2018 to introduce an additional tax band for higher earners, and to build a new development bank that would act as a guarantee system to support farmers.