The World Bank President says he does not think Ghana and other African countries with high debt levels are at risk of falling into debt distress or “Highly Indebted Poor Country (HIPC)” category.
Jim Young Kim was responding to a question about how the rising debt levels of some African countries, especially for those that have exited HIPC risk of falling into that category again or debt distress.
But speaking at press conference at the Annual International Monetary Fund (IMF)/WORLD Bank meetings in Washington DC, Friday, Mr Jim said the debt to GDP ratios in these countries including Ghana is pretty reasonable.
“You know we are not there yet because some of these countries are having their debt levels at about 50 percent, but there is still many countries that are below this mark in terms of debt to GDP ratio,” he said.
He added that what the World Bank is doing now is to try and focus on creating asset classes like infrastructure that will require relative less indebtedness and really bring private sector investments into these countries adding, “we are watching the debt levels very closely”.
The World Bank president said when it comes to the debt levels in these African countries “I am not yet concerned that we are reaching a debt crises level, certainly not Sub-Saharan Africa, but we have to watch it.”
The IMF in its latest fiscal report is forecasting an end of year debt-to-GDP of 66 percent for Ghana by December 2015.
The IMF last year classified Ghana as being at risk of high debt distress. According to the Bank of Ghana’s, the country’s debt to GDP as at June
reached GH¢110 billion, representing 66 percent of the economy’s value.
According to IMF’s HIPC initiative and MDRI statistical update, Ghana reached a decision point on the HIPC on February 2002 and completion point in July 2004.
The IMF and World Bank launched the HIPC Initiative in 1996, with the aim of ensuring that no poor country faces a debt burden it cannot manage.
Since then, the international financial community, including multilateral organizations and governments have worked together to reduce to sustainable levels the external debt burdens of the most heavily indebted poor countries.