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Ghana ranked as country with second highest debt risk globally – Finance Bitcoin News
According to Visual Capitalist, Ghana is now placed second on the list of countries with the highest default risk in 2022. Only four countries, namely Ukraine 10,856 basis points (bps), Argentina (4,470), El Salvador (3,376) and Ethiopia (3,035) have a credit swap spread that is higher than Ghana’s at 2,071 bps.
El Salvador has the highest default risk
After seeing inflation soar to over 29% in June, Ghana, West Africa’s second largest economy, is now ranked as one of the countries most likely to default this year, Visual Capitalist’s latest sovereign debt vulnerability rankings show. According to the data, Ghana is now placed second, just behind the Central American state and the first country to make bitcoin legal tender, El Salvador.
As shown by data from Visual Capitalist – an online publisher focusing on technology and global economics, among other things – Ghana’s five-year credit default swap (CDSS) spread of 2,071 basis points (bps) is one of the highest globally. Only four countries have a credit swap spread higher than Ghana: Ukraine (10,856 bps), Argentina (4,470 bps), El Salvador (3,376 bps) and Ethiopia (3,035 bps).
As explained by Investopedia, CDS “is a financial derivative that allows one investor to swap or offset credit risk with another investor.”
Interest expense ratio
Another metric that points to Ghana’s likely default is the country’s interest expenditure as a percentage of gross domestic product (GDP). According to Visual Capitalist data, with a share of 7.2%, Ghana’s interest expense ratio is the second highest in the world, behind only Egypt (8.2%).
When these calculations are combined with the country’s debt as a percentage of GDP at 84.6%, and a government bond yield of 17.1%, Ghana, which eventually agreed to seek help from the International Monetary Fund (IMF), looks destined to follow. following in the footsteps of Sri Lanka, which defaulted on its obligations in May.
Meanwhile, according to the Visual Capitalist ranking, Tunisia is the African country with the second highest default risk in 2022 and is followed by Egypt. Globally, Tunisia is ranked third, while Egypt and Kenya are ranked fifth and sixth respectively. The top ten countries with the highest standards are Namibia.
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