Many emerging markets made a bet on accelerating development by borrowing from international markets. But in doing so “you’re basically walking along a very fine line of just hoping that the markets are kind, that global interest rates stay low, that plentiful financing remains available from international markets,” Robertson said. “It makes you very vulnerable.”

When the IMF comes calling 
Even as Ghana opened talks with the IMF, some government ministers were publicly ridiculing the idea. In late September, Akufo-Addo spent a week touring the country to commission and check on dozens of new projects — roads, schools, a recycling plant, the expansion of the Kumasi airport, and a military hospital without indicating how these expensive projects would be funded.

Despite the mixed messages Ghana does want a deal from the IMF which is visiting Accra this week. And the incentive is clear: it needs the IMF to help restore access to  international capital markets as soon as possible and avoid borrowing from domestic markets at rates as high as 35%. The World Bank projects the country’s total public debt will hit 105% of GDP by the end of this year.  The country needs to repay $3.5 billion in loans and bonds next year, according to data compiled by Bloomberg, a little more than it is asking for from the IMF.

The IMF had by the end of October already disbursed a record $142.5 billion to member nations this year. That is almost double the overall outstanding balance at the end of 2019, just before the pandemic, according to IMF data.

“China is slowing down, the US is slowing down, the EU is slowing down,” Kristalina Georgieva, IMF managing director, said in Berlin on Nov. 29. “That hurts developing countries. But they suffer also from high interest rates and from currency depreciation.

“We have 25% of emerging markets in debt distress,” she added. “They need support.”

Fear of contagion remains low. “A lot of the problems that we see tend to be quite confined to the country,” said Jason Tuvey, senior emerging markets economist at Capital Economics. “It doesn't cause a huge spillover to the rest of the world.”

Ghana, a regular client of the IMF — this is its 17th request to the fund — has often failed to meet targets set in previous programs, including the last one, which ended in 2019 with a waiver from the fund, essentially rubber stamping its lack of progress. The government’s decision to aggressively tap eurobond markets in 2020, so soon after that program ended, spooked investors and led the agencies to revisit their ratings.

“That triggered alarm bells,” said Simons, “like, ‘what is going on with this country?’” A government plan to slash expenditure by 20% did little to assuage the market.

Imani estimates that 1.4 million Ghanaians are directly exposed to government securities in part via insurance assets and pension funds — a politically volatile situation now that the government is restructuring its  domestic debt to qualify for IMF support. The proposed deal has been condemned by the country’s pension trustees who said it would  “destroy the savings of Ghanaians and further undermine market confidence.” Fitch estimates Ghana's debt service payments will be $3 billion in 2023, including amortization and interest.

Back in central Accra, Priscilla Akologo points at the gaping hole in the ground that might one day hold a $400 million church. The site once housed government buildings, since demolished, that for the past two decades provided customers for her roadside food stall. But between the lack of office workers and a quadrupling of cooking oil prices, her business selling fried fish and cornmeal dumplings known as kenkey has been crippled.

“We are all in a total mess with no sign of hope,” she says. “Prices are rising by the day and basic necessities like food and water are becoming too expensive to afford.” 

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