A particularly gruesome example of overindebtedness can be found in West Africa.

Expand chart
Data: Jubilee Debt Campaign; Chart: Andrew Witherspoon/Axios

The details: Ghana's foreign-currency debts are rising. The current IMF program, which began in 2015, projected external debt of 40% of GDP this year and total debt of 61%. The actual numbers look more like 46% and 71%, respectively.

  • Its government revenues are flat: In 2014, before the IMF program started, they were 17.8% of GDP. They were meant to rise to 20.3% this year, but instead they have fallen slightly, to 17.6%.
  • Its currency is in free fall: Government revenues are in Ghanaian cedis. It now takes roughly 5 cedis to buy $1, up from 2.5 cedis at the beginning of 2014.

The bottom line: In 2018, a majority of Ghana's government revenues will be spent just on servicing the country's foreign-currency-denominated debt, per the Jubilee Debt Campaign.

  • With all those revenues leaving the country, there's much less left over for Ghanaians: Real domestic government expenditure has fallen from 820 cedis per person in 2013 to just 680 cedis per person last year. No wonder growth is anemic.
  • Ghana is an extreme example of what's happening in Africa more broadly: On average, African countries spent 11.8% of their revenues on external debt payments last year, a number that has more than doubled in the past five years.

The big question: What will happen when the current IMF program ends in April? New loans, from the IMF or anybody else, are unlikely to be the answer when the problem is that Ghana already has too much debt.

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