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Capital Markets

Markets: The rise of invisible debt

It is not just corporations and states that have built up record debt levels: the indebtedness of the booming sub-sovereign market – especially among state-owned enterprises – can be difficult to see until something goes wrong. Should investors be spooked?


When the IMF granted the Republic of Ghana a three-year bailout arrangement under its extended credit facility in 2015, the multilateral development bank did not fully grasp how much debt the overburdened country really had. 

The IMF was aware that the country’s poorly managed state-owned enterprises (SOEs) were a large part of the problem and had to be reformed. In 2015, according to the IMF, SOEs were responsible for losses of 1.8% of GDP and gross liabilities of 13.7% of GDP, mostly due to the country’s struggling energy sector.

But soon after presidential elections in December 2016, when the country’s opposition party took power, anomalies were uncovered in the government’s balance sheet.

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