Eurobonds and Africa’s new debt crisis: The experience of Ghana’s 2022 debt default

Kwame Asah-Asante; Abdul Hakim  Ahmed

Kwame Asah-Asante Department of Political Science, School of Social Science, University of Ghana, Legon, Ghana. https://orcid.org/0009-0005-6258-7788
Abdul Hakim Ahmed Department of Political Science Education; University of Education, Winneba, Ghana https://orcid.org/0000-0001-8438-6278

Keywords: Eurobonds, Ghana, debt crisis, IMF bailout, HIPC Initiative

Abstract

Despite benefiting from over US$ 100 billion in debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI) less than two decades ago, many African states are back into another cycle of debt crisis. While existing studies on this current Africa’s indebtedness have highlighted and blame problems mainly relating to Chinese debt trap diplomacy and the general fragility of African economies in response to external shocks such as COVID-19, very little, if any has been done regarding the issuances and mismanagement of Eurobonds in the last decade and half. This study seeks to fill that important gap in the literature using Ghana as a case study. Utilizing documentary data including those from the IMF, World Bank, African Development Bank and other governmental and non-governmental sources and using neoliberalism as a theoretical lens, we conclude that the nine issuances of Eurobonds and misapplication of their proceeds under successive governments in Ghana between 2007 to 2021 is largely to blame for pushing the Ghanaian state into this current bout of debt crisis with grave implications to the economy and poverty reduction. This conclusion contradicts popular narrative within academic, political and policymaking arena that pinned the blame of the current debt crisis mainly on COVID-19, Russia-Ukraine war, Chinese collateralized loans, among other reasons.