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Ghana Becomes Latest Global South Country to Default on Debt

Ghanaian Finance Minister Ken Ofori-Atta addressing the country's recent default on its foreign debt obligations in a Facebook Live video on December 19, 2022.

Ghana announced it will suspend payments on most of its debt to bondholders, other commercial lenders, and foreign governments, officially putting it in default. The announcement comes a week after a staff-level meeting with the IMF and a ratings downgrade. Ghana’s economy is spiraling, with 70%-100% of government revenue going to debt servicing and domestic inflation hitting 50%, triggering protests.

Out of its $28.4 billion external debt, $1.9 billion is owed to China, only about 6.7%. In contrast, Eurobond debt makes up 46.1% ($13.1 billion.) Bondholders said the relatively small share of Chinese debt will likely smooth the debt restructuring process, in contrast to countries like Zambia. 

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