Finance Minister Dr. Cassiel Ato Forson has expressed concern regarding the heightened risk premiums associated with African debt, cautioning that this trend is increasing borrowing costs for economies throughout the continent, including Ghana.
He noted that African nations are forced to obtain loans at rates significantly higher than those of their counterparts in other regions, a scenario that jeopardizes fiscal stability and exacerbates debt vulnerabilities.
Africa’s total debt has now exceeded one trillion dollars, with over 20 sovereign nations projected to be classified as having unsustainable debt by the conclusion of 2024. Dr. Forson elaborated that this financial burden is a key contributor to the continent’s recurrent increases in debt-to-GDP ratios.
He remarked, “I believe the time has arrived for us to focus on what constitutes debt service as a percentage of revenue. This is primarily due to the fact that we are borrowing at excessively high rates. Why should African nations incur such high borrowing costs compared to their peers in other regions of the world?
Why should the risk premium for African nations differ so significantly from that of Europe, America, and other global regions?”
He further stated, “Due to the high cost of borrowing, we may have minimal debt, yet the expenses associated with servicing that debt are exorbitant.”
Dr. Forson made these comments in Accra following the receipt of a petition from the African Regional Organization of the International Trade Union Confederation (ITUC–Africa) in partnership with the Trade Union Congress (TUC) of Ghana, which is advocating for the complete cancellation of Africa’s debt.
Simultaneously, he called on African governments to exhibit greater accountability and transparency in the management of public debt.
He warned, “For me, the utilization of debt is also crucial. If we manage our debt effectively, we should be capable of repaying these debts, as sometimes we do not utilize the debt we accumulate properly.”
He further emphasized, “We cannot continuously request debt forgiveness if we mismanage the funds once we acquire this debt. Therefore, it is crucial for the TUC to urge governments to maintain transparency in their debt accounting and to utilize this debt effectively.”
