- Ghana recently defaulted on most of its external debt and is experiencing high inflation, leading to an economic crisis.
- Ghana is an important country for African development, as it is one of the leading candidates to become the “first mover” in the region.
- The crisis was caused by a rapid depreciation of the Ghanaian currency, the cedi, which made it harder to afford imports like food and fuel.
- Ghana’s government borrowed a lot of external debt over the past 15 years, which raised government debt to about 100% of GDP.
- Ghana’s inflation is not due to an attempt to pay off external debt by printing local currency, but rather due to businesspeople expecting the government to eventually print money to pay off its debt.
- Ghana’s government wisely defaulted on its debt, drastically lowering the country’s overall government debt burden and making it easier to get a bailout from the IMF.
Click HERE for original. Published December 19, 2022