News Guide Africa

Tag: Debt to GDP

  • Ghana’s economy navigates inflation easing and structural debt

    Ghana’s economy navigates inflation easing and structural debt

    By Adnan Adams Mohammed

     

    Ghana’s macroeconomic landscape reflects a delicate transition from emergency fiscal stabilization to long-term structural recalibration.

    Following a turbulent period marked by comprehensive sovereign debt restructurings, rapid currency depreciation, and double-digit price increases, key performance indicators suggest an economy finding its footing. However, underlying structural vulnerabilities, ranging from elevated borrowing costs to persistent energy sector liabilities, continue to temper broader growth expectations.

    Data from the Bank of Ghana and the Ghana Statistical Service highlights a notable deceleration in headline inflation from historic highs. This disinflationary trend has allowed monetary authorities to transition away from aggressive monetary tightening, stabilizing the benchmark policy rate at 14.0%. Backed by strong international prices for gold, resilient cocoa receipts, and steady donor inflows under ongoing multilateral support programs, the Cedi has experienced reduced volatility compared to previous adjustment cycles, bolstering foreign exchange reserves and consumer sentiment.

     

    Macroeconomic Indicator Previous Peak / Level Current Estimate Policy Implications

    Real GDP Growth 0.5% (2020) ~4.8% – 5.0% Driven primarily by non-oil services and industrial extraction.

    Monetary Policy Rate 30.0% (July 2023) 14.0% Easing liquidity constraints while maintaining an anti-inflationary bias.

    Public Debt-to-GDP ~61.0% ~45.5% Reflects restructurings, though debt-service ratios remain elevated.

    Current Account Deficit Surplus (~4.4% of GDP) Supported by trade surpluses in the extractive export sectors.

     

    Expert Perspectives on the Recovery

    The ongoing trajectory of the domestic economy remains a subject of active debate among monetary authorities, international development partners, and private enterprise operators:

    “The current policy stance is intended to steer inflation toward the central bank’s medium-term target while allowing policymakers more time to assess incoming data and its implications for the domestic economy”, Dr. Johnson Asiama, Governor of the Bank of Ghana.

     

    “We are moving into a phase of measured recovery, where fiscal stability and disciplined debt management take priority over rapid, unchecked expansion”, World Bank Regional Lead, Africa Economic Update.

     

    “While easing inflation helps bring down operational input costs, high interest rates and cautious consumer spending mean small businesses still face tight liquidity”, Kwame Addo, Private Sector Analyst & Trade Consultant

     

    “Ensuring that the macroeconomic gains filter down to the real economy requires sustained investment in domestic value-addition, particularly in agribusiness and light manufacturing”, Abena Mensah, Senior Fellow at the Center for Economic Policy

     

    Key Growth Drivers vs. Downside Risks

    ● Primary Growth Drivers: The non-oil services sector led by telecommunications, financial services, and digital trade continues to serve as the chief engine of domestic output. This is complemented by strong extractive yields from high gold production and an improved balance-of-payments position that provides crucial import cover.

    ● Fiscal and Structural Challenges: Although the primary budget deficit has narrowed under strict expenditure controls, high legacy debt-service obligations, tight domestic credit conditions, and elevated youth unemployment continue to restrict private sector capital investment.

    ● Energy Sector Liabilities: Accumulating arrears within the domestic power supply chain remain a notable implicit fiscal liability, requiring continued sector reform to prevent fiscal slip-ups.

    ● External Volatility: External commodity price fluctuations, particularly shifting global oil and cocoa prices, continue to present vulnerability to state revenue projections and foreign exchange supply.

    While macroeconomic stabilization initiatives have successfully curbed runaway inflation and reduced currency volatility, translating these top-line figures into widespread employment creation and improved living standards remains the chief hurdle for economic managers over the medium term.

     

  • Ghana’s public debt rises to GH¢684.6bn in 2025’s 3rd quarter

    Ghana’s public debt rises to GH¢684.6bn in 2025’s 3rd quarter

    Ghana’s public debt rose by GH¢71.6 billion in the third quarter of 2025, pushing the total debt stock to GH¢684.6 billion ($55.1 billion) as of September.

    Per the Bank of Ghana’s latest Summary of Economic and Financial Data for the period ending November 2025, despite the quarterly increase, the report shows Ghana is still making substantial progress in reducing its overall debt burden compared to last year.

    The current debt level, equivalent to 48.9% of GDP, is up from GH¢613 billion (43.8% of GDP) in June, but broader trends remain favourable.

    Between January and September 2025, Ghana cut its total debt by GH¢67.5 billion, while year-on-year figures show an even deeper reduction of GH¢125.4 billion compared to September 2024.

    External debt was the major driver of the quarter three spike, climbing to GH¢367 billion from GH¢300.3 billion in June.

    Yet, on longer timelines, external debt has posted dramatic declines  falling GH¢432 billion year-to-date and GH¢508.6 billion year-on-year. It now accounts for 26.2% of GDP.

    Domestic debt remained relatively stable, inching up to GH¢317.6 billion from GH¢312.7 billion in June, with only modest movements, year-to-date and year-on-year.

    The Bank of Ghana estimates Ghana’s nominal GDP at GH¢1.4 trillion, the base for the revised debt-to-GDP ratios.

     

     

     

     

     

     

     

     

     

     

     

     

     

  • IMF projects Ghana’s debt-to-GDP ratio to fall to 60% by end of 2025

    IMF projects Ghana’s debt-to-GDP ratio to fall to 60% by end of 2025

    The International Monetary Fund (IMF) has projected Ghana’s public debt to settle at around 60 percent of Gross Domestic Product (GDP) by the close of 2025, citing the country’s recent debt restructuring programme as the main driver behind the significant decline in debt levels.

    Speaking at a press briefing in Washington, D.C., on Thursday, September 11, 2025, the IMF’s Director of Communications, Julie Kozack, explained that the restructuring has materially eased Ghana’s debt burden.

    She noted: “The recent debt restructuring agreement has significantly improved debt service indicators for Ghana.”

    According to Mrs. Kozack, the improved debt outlook provides room for economic rebound and critical investment inflows.

    “This drop can be described as a specifically steep reduction in Ghana’s public debt,” she added, describing it as a meaningful step toward restoring fiscal sustainability.

    Looking ahead, the IMF stressed that sustaining these gains will require continued reforms. Mrs. Kozack underscored the need to “boost domestic revenue, strengthen public financial management, and overall maintain fiscal discipline.”

    Figures from the Bank of Ghana confirm the trend. As of June 2025, Ghana’s total debt stock stood at GH¢613 billion, representing 43.8 percent of GDP.

    She further noted that the new administration has taken bold measures including enacting a strong budget, tightening monetary policy, implementing public financial management reforms, and adjusting electricity tariffs while continuing to make progress with debt restructuring efforts.

     

  • Debt-to-GDP to be reversed to 55% by 2028 – Gov’t hopeful

    Debt-to-GDP to be reversed to 55% by 2028 – Gov’t hopeful

    Adnan Adams Mohammed

    The government is targeting to achieve a debt-to-Gross Domestic Product, (GDP), ratio of 55% by 2028 despite the exemption of pension funds from the debt exchange programme.

    According to a senior government official, all stakeholders are committed to ensuring a programme from the International Monetary Fund is secured on time to bring back live into the Ghanaian economy.

    Commenting after government and organised labour reached an agreement to exempt pension funds from the debt exchange programme, the Finance Minister said though exempting pension funds comes as a cost to government, government and organsied labour will work together to close the fiscal gap.

    “Obviously, the issue of exempting pension funds from it [debt exchange programme] is at a cost and we have committed – government  and organise labour – to work together to ensure that we find means of plugging a hole that would ensure that we would return to the 55% thresh hold (debt-to-GDP)”, Ken Ofori-Atta, has expressed optimism. “I think that we are all committed to it because we know it is important to lead us to a board agreement [with the IMF] so that we continue with this success that we have.”

    “We are all in the spirit of Christmas and with the partnership that we have, I want to thank everyone who participated in the way forward”, he pointed out.

    Mr. Ofori-Atta also said the 2023 Budget which the appropriation was passed by parliament last week further brings confidence to the economy.

    “Yesterday, as you know, at 4:30 pm, parliament passed the appropriation and the budget [2023] further bring confidence as to where we are going. So of course,  the strength have been renewed to the spirit of the direction of where the nation is going.

  • Gov’t plans to restructure domestic debt

    Gov’t plans to restructure domestic debt

    Adnan Adams Mohammed

    The government plans to restructure its domestic debt component of the total public debt of GH¢351.8 billion, which is 80.1 percent of Gross Domestic Product (GDP), at the end of December 2021.

    Figures from the Bank of Ghana indicates that, the domestic debt stood at GH¢181.8 billion as at  December 2021, equivalent to 41.4 of GDP, while the external component of the total public debt shot up to US$28.3 billion or GH¢170.0 billion.

    The Finance Minister speaking to a gathering in Accra, last week, to announce government’s support and programmes for the upcoming 2022 Annual Meetings of the African Development Bank to be held in Accra later this month, posited that, the issue of restructuring Ghana’s debt was a complicated one, especially the Eurobond and the private sector loans.

    “The issue of restructuring debt is a very complicated issue especially with the private sector and the Eurobond etc. We need to decide among ourselves on what type of structure that will be useful to us. We have essentially about 50/50 with regards to domestic and external debt”, Ken Ofori-Atta expressed.

    “The domestic debt of course has interest rates of about three and half times what the foreign debt has. And then we look at the profile and clearly the foreign debt in terms of the impact really begins to hit in 2025 with regards to our Eurobonds etc.”

    To him, solving the domestic debt conundrum should be tackled immediately.

     “So solving the domestic debt conundrum is what we should be looking at and that is where we are putting our minds as to how best to do that”.

    On the rising inflation Mr. Ofori-Atta pointed out that though the situation is a global one, government is committed to building an entrepreneurial society to trade among themselves and reduce imported inflation.