![](\"http:\/\/www.ghanamma.com\/wp-content\/uploads\/2022\/09\/Debt.jpg\")
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A Senior Director at ratings agency, Fitch, Mahin Dissanayake, has warned Ghana of a possible sovereign debt default, saying, any kind of debt restructuring could threaten the local banking sector.<\/p>\n
According to him, \u201cdefault is a real possibility\u201d.<\/p>\n
Speaking at a press conference, Mr. Dissanayake said \u201cGhanaian banks hold large volumes of government securities, so debt distress is going to put a lot of stress on the banks\u201d he said.<\/p>\n
He explained that \u201cthe operating environment is looking very fragile.\u201d<\/p>\n
According to him, reports that Ghana is planning to restructure that local currency debt as part of an IMF deal were \u201chighly unusual\u201d, adding going through with such a plan would likely cause significant problems for local banks.<\/p>\n
\u201cWe estimate that if there was a 30% haircut, that would make at least several banks insolvent,\u201d he said.<\/p>\n
\u201cIt\u2019s not just the banking sector that would be affected but also insurance companies, pension funds, asset managers \u2013 anyone who holds government securities,\u201d he added.<\/p>\n
According to data from the Bank of Ghana, Ghana\u2019s public debt stock has more than doubled since 2015, steadily climbing from 54.2% of Gross Domestic Product to 76.6% at the end of 2021.<\/p>\n
Interest payments have been the government\u2019s largest annual expense since 2019.<\/p>\n
The country is expected to pay about 41 billion as interest payments in 2022.<\/p>\n
Investors demand premium of 2,196 basis points to hold Ghana\u2019s Eurobonds<\/strong><\/p>\n Investors demand a premium of 2,196 basis points over US Treasuries to hold Ghana\u2019s Eurobonds, compared with an average of 875 for African issuers.<\/p>\n Similarly, Ghana\u2019s sovereign dollar-denominated bonds dropped as much as 1.6 cents in the dollar on Wednesday, September 21, 2022 with debt maturing in 2025 and 2026 suffering the biggest declines, Tradeweb data showed.<\/p>\n However, much of the losses occurred in early trading, with investors ditching riskier assets in favour of safe havens amid rising tensions between the West and Russia.<\/p>\n Also, the cost of insuring Ghana\u2019s debt against non-payment using credit-default swaps has soared to almost 5,000 basis points, from less than 1,000 in January 2022.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" A Senior Director at ratings agency, Fitch, Mahin Dissanayake, has warned Ghana of a possible sovereign debt default, saying, any kind of debt restructuring could threaten the local banking sector. According to him, \u201cdefault is a real possibility\u201d. Speaking at a press conference, Mr. Dissanayake said \u201cGhanaian banks hold large volumes of government securities, so […]<\/p>\n","protected":false},"author":1,"featured_media":1208906,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[72],"tags":[1580,20966,1749,1404,2145,85,89],"class_list":["post-1208905","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-debt","tag-default","tag-director","tag-faces","tag-fitch","tag-ghana","tag-senior"],"_links":{"self":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts\/1208905","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/comments?post=1208905"}],"version-history":[{"count":0,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts\/1208905\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/media?parent=1208905"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/categories?post=1208905"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/tags?post=1208905"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}