Headline, September 29 2023/ DEBT : ''' GHANA -'' STUDENTS''- GHOSH '''

DEBT : ''' GHANA -''

 STUDENTS''- GHOSH '''

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THE PITILESS LOOP : the debt load for developing countries is now estimated to top $200 billion threatens to upend economies and bring to knees millions of lives and living, education, healthcare and incomes.

ACCRA - GHANA : TRAPPED IN A CYCLE OF DEBT. Despite hard-won gains, nations like Ghana often need repeated bailouts.

Emmanuel Cherry, the chief executive of an association of Ghanaian construction companies, sat in a cafe at the edge of Accra Children's Park, near the derelict Ferris wheel and kiddie train, as he tallied up how much money government entities owe thousands of contractors.

BEFORE INTEREST, he said, the back payments add up to 15 billion cedis - roughly $1.3 billion. '' Most of the contractors are home,'' Mr.Cherry said. Their workers have been laid off.

Like many others in the West African country, the contractors have to wait in line for their money. Teacher trainees complain that they are owed two month's worth of back pay. Independent power producers that have warned of major blackouts are owed $1.58 billion.

THE GOVERNMENT is essentially bankrupt. After defaulting on billions of dollars owed to foreign lenders in December, the administration of President Nana Akufo-Addo had no choice but to agree to a $3 billion loan from the lender of last resort, the International Monetary Fund.

IT WAS THE 17TH time Ghana had been compelled to turn to the fund since it gained independence in 1957.

The latest crisis was partly prompted by the havoc of the coronavirus pandemic, Russian invasion of Ukraine and higher food and fuel prices. 

But the tortuous cycle of crisis and bailout has plagued dozens of poor and middle-income countries throughout Africa, Latin America and Asia for decades.

THESE PITILESS LOOPS were discussed one week ago at the latest United Nations General Assembly. The debt load for developing countries - now estimated to top $200 billion - threatens to upend economies and unravel painstaking gains in education, health care and incomes. 

BUT poor and low-income countries have struggled to gain sustained international attention.

IN GHANA, the I.M.F. laid out a detailed rescue plan to get the country back on its feet - reining in debt and spending, raising revenue and protecting the poorest - as Ghana negotiates with foreign creditors.

STILL, nagging question for Ghana and other emerging nations in debt persists : Why will this time be any different?

The latest rescue plan outlined for Ghana addresses key problems, said Tsidi M.Tsikata, a senior fellow at the African Center for Economic Transformation in Accra, Ghana's capital. But so did many of the previous ones, he said.

The last time Ghana turned to the fund was in 2015. Within three years, the country was on its way to paying back the loan and was among the world's fastest-growing economies. Ghana was held up as a model for the rest of Africa.

Agriculture production was up, and major exports - cocoa, oil and gold - were rising. The country had invested in infrastructure and education and had begun a cleanup of a banking industry riddled with distressed lenders.

YET Accra is again desperately in need. The I.M.F, loan agreement, and the delivery of a $600 million installment in May, have helped stabilize the economy, settle wild fluctuations in currency levels and restore a modicum of confidence.

Inflation is still running above 40 percent but it is down from its peak of 54% in January.

Despite the I.M.F's blueprint, though, Mr. Tsikata, previously a division chief at the fund for three decades, said the chance that Ghana wouldn't be back in a similar position a few years from now '' rests on a wing and a prayer.''

The effects of devastating climate change loom over the problem. Within the next decade, a U.N. analysis estimates '' trillions of dollars '' in new financing will be needed to mitigate the impact on developing countries.

Senyo Hosi, executive chairman of Kleeve & Tove, an investment company in Accra, said he had agribusiness that produced rice in the Volta region and worked with more than 1,000 growers.

He can't do required upgrades to equipment, though, because 30 percent interest rates make borrowing impossible. ''I stopped production,'' he said.

The Honour and Serving of the latest Publishing on World Debt and Future, continues. The World Students Society thanks author Patricia Cohen.

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