Stiglitz, a Nobel Prize winner and a former chief economist at the World Bank. “You don’t have six people in a room,” said Joseph E. The dizzying proliferation of lenders now characterizes much of the debt burdening distressed countries around the globe - making it also more complex and difficult to resolve. The magnitude and type of debt means “this crisis is much deeper than the type of economic difficulties Ghana has faced in the past,” said Stéphane Roudet, the IMF’s mission chief to Ghana. While the haircut may have been necessary, it undermined confidence in the banks.Īs for foreign lenders, there are thousands of private, semipublic and governmental creditors, including China, which have different objectives, loan arrangements and regulatory controls. A partial restructuring, which cut returns and extended the due dates, was completed in February. The situation was so unusual that the IMF for the first time made settling this domestic debt a prerequisite for a bailout. In Ghana, the government owed $63.3 billion at the end of 2022 not just to foreign creditors but also to homegrown lenders - pension funds, insurance companies and local banks that believed the government was a safe investment. analysis estimates, trillions of dollars in new financing will be needed to mitigate the impact on developing countries. The effects of devastating climate change loom over the problem. Inflation is still running above 40% but is down from its peak of 54% in January.ĭespite the IMF’s blueprint, though, Tsikata, previously a division chief at the fund for three decades, said the chance that Ghana wouldn’t be in a similar position a few years down the road “rests on a wing and a prayer.” The IMF loan agreement, and the delivery of a $600,000 installment in May, have helped stabilize the economy, settle wild fluctuations in currency levels and restore a modicum of confidence. The country had invested in infrastructure and education, and had begun a cleanup of the banking industry, which was riddled with distressed lenders. Ghana was held up as a model for the rest of Africa.Īgricultural production was up, and major exports - cocoa, oil and gold - were rising. Within three years, the country was on its way to paying back the loan, and it was among the world’s fastest growing economies. The last time Ghana turned to the fund was in 2015. But so did many of the previous ones, he said, and still crises recurred. Tsikata, a senior fellow at the African Center for Economic Transformation in Accra. The latest rescue plan outlined for Ghana addresses key problems, said Tsidi M. The spokesman added that the problem in Nigeria was resolved even more swiftly.Īs of March 22, Google’s software was giving a rate of 5.23 cedis to one US dollar.Still, a nagging question for Ghana and other emerging nations in debt persists: Why will this time be any different? The Ministry of Finance also noted in the release that Nigeria and Pakistan have suffered similar errors in presenting their currency values this year.Ī Google spokesman did not dispute the ministry’s account but emphasized that the mistake was rectified within an hour. But sometimes there are temporary issues that can cause people to have undesired experiences, like the one this past Friday. “We always aim to provide people with the most relevant, useful information to help them to make the right decisions. This was caused by a minor glitch that was quickly fixed,” wrote Titi Akinsanmi, Google’s head of Public Policy & Government Relations, West and Francophone Africa. “We are aware of the issue of inaccurate conversions for Ghanaian Cedi currency on Friday the 15th of March. Google explained the mistake in a letter to Ghana’s Ministry of Finance, which the ministry publicized in a press release Wednesday. The figure was the result of an error from the search engine, not a disastrous financial crash. Ghanian President Nana Akufo-Addo has attributed the cedi’s poor performance to an over-reliance on imports.īut it was still a shock for Ghanians who checked Google’s currency conversion rates on March 15 to discover that the cedi was trading at a rate of 22.72 to one US dollar – an increase of more than 300% on the previous day. It fell to a record low against the dollar in February, according to Bloomberg, and has depreciated by 8.6% this year – the most of more than 140 currencies tracked by the financial news agency. It’s been a rough 2019 for Ghana’s currency, the cedi.
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