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confidentially speaking

The Africa Confidential Blog

  • 1st December 2022

Testing times for Ghana's Black Stars and treasury team

Blue Lines

 It has been a game of two halves for Ghana's World Cup squad and its treasury team in Accra. After beating South Korea 3-2 in the group stage on 28 November, the Black Stars will face Uruguay on 2 December.

Equally hard-fought will be finance minister Ken Ofori-Atta's efforts to get his 2023 budget proposals through parliament and make headway in his talks with the IMF for a US$3 billion bailout. When Ofori-Atta read the budget on 24 November, people were distracted; the Black Stars were playing – and losing – to Portugal that day in Qatar.

Now politicians and bankers alike are questioning Ofori-Atta's budgetary assumptions. Bright Simons of the IMANI Centre in Accra calls it one of the 'most expansionary budgets' in Ghana's history when investors had expected heavy cuts. He dismisses Ofori-Atta's plan to boost revenue by over 68% as 'wishful thinking'.

Rubbing salt into the wound on 29 November, Moodys investor services cut Ghana's credit rating by two notches to Ca, the rating agency's second lowest score. This suggests a restructuring of Ghana's foreign debt is all but inevitable, with treasury sources suggesting that foreign bondholders may have to accept a 30% haircut. That would smooth the path for the country to return to sustainable debt levels, a key precondition for the IMF bailout. But in the process, the government risks shredding its financial credibility.