The Ghanaian government has gone bankrupt after failing to pay billions of dollars it owed foreign creditors last December, according to a report by The New York Times.

President Nana Akufo-Addo’s government “had no choice but to agree to a $3 billion loan from the lender of last resort, the International Monetary Fund,” noted the paper, underpinning Ghana’s fall into dire financial straits, with government entities owing billions to contractors and facing a mounting debt crisis. 

Emmanuel Cherry, the chief executive of an association of Ghanaian construction companies, recently revealed that government back payments to contractors amounted to a staggering 15 billion cedis, approximately $1.3 billion, before interest, said the media outlet, pointing out that the financial crisis has had far-reaching consequences, with many contractors laying off workers, exacerbating the country’s unemployment problem. 

The Ghanaian government reportedly owes independent power producers $1.58 billion and faces the threat of nationwide blackouts.

“The government is essentially bankrupt,” stated the report. “It was the 17th time Ghana has been compelled to turn to the fund since it gained independence in 1957. This latest crisis was partly prompted by the havoc of the coronavirus pandemic, Russia’s invasion of Ukraine, and higher food and fuel prices.”

At the upcoming United Nations General Assembly, the growing debt load for developing nations, estimated to exceed $200 billion, would be a significant topic of discussion as the IMF presented a comprehensive rescue plan to address Ghana’s debt, reining spending, increasing revenue, and protecting the most vulnerable populations while negotiating with foreign creditors. 

In 2015, Ghana received IMF assistance and quickly rebounded, becoming one of the world’s fastest-growing economies. The country invested in infrastructure and education and is trying to clean up its banking industry. 

The report acknowledged that the recent IMF loan helped stabilise the economy by curbing currency fluctuations and restoring some confidence. Although inflation remains above 40 per cent, it has decreased from its peak of 54 per cent in January.

Tsidi Tsikata, a senior fellow at the African Center for Economic Transformation in Accra, cited in the report, stated that the IMF’s blueprint addresses critical issues but questions whether Ghana will avoid similar financial woes.