KEY POINTS
- Restructuring deals and austerity measures cut Ghana’s debt by GH¢150 billion since January 2025, lowering debt-to-GDP from 76% to 63% and strengthening the cedi
- Freed fiscal resources target agriculture, digital infrastructure, and healthcare via a new Debt Escrow Framework ensuring future loans are self-liquidating
- Unemployment and stalled Eurobond negotiations threaten progress, requiring export diversification to sustain recovery amid lingering social discontent.
President John Dramani Mahama revealed at the 60th Africa Development Bank AGM in Abidjan that Ghana has slashed its public debt by a staggering GH¢150 billion (approx. $12.3 billion) since January 2025.
This rapid fiscal turnaround, achieved through aggressive restructuring and austerity measures, has strengthened the embattled cedi by 18% against the dollar and accelerated Ghana’s path to debt sustainability.
“Our painful sacrifices are bearing fruit,” President Mahama told finance ministers and central bank governors, disclosing that debt-to-GDP had plummeted from 76% to 63% in under half a year. *”If this trajectory holds, we’ll hit our 2028 target of 55-58% by December—three years ahead of schedule.”
The reduction follows February’s landmark restructuring deal with bilateral creditors including China and the Paris Club, which extended repayment timelines and wrote off $4.7 billion in loans tied to non-essential infrastructure projects.
Fiscal space fuels strategic reinvestment
Critically, the debt relief has unlocked GH¢23 billion in fiscal breathing room. Finance Ministry documents confirm these funds are being channeled into three high-impact sectors: agricultural industrialization (45%), digital infrastructure (30%), and healthcare expansion (25%). “Smart borrowing means investing where revenues repay debts,” Mahama emphasized, citing the newly operationalized Debt Escrow Framework requiring all future loans to demonstrate clear income-generating potential.
According to Ghana Business News, the turnaround marks a dramatic shift from 2023, when debt peaked at 110% of GDP amid inflation soaring above 54%. An International Monetary Fund (IMF) review last March credited Ghana’s recovery to three pillars: stringent cuts to energy and fuel subsidies saving GH¢8.4 billion monthly, digitization of tax collection boosting revenues by 27%, and anti-corruption reforms recovering GH¢9.1 billion in stolen assets. “The medicine was bitter but necessary,” admitted Deputy Finance Minister Dr. Nana Ama Poku. “Pension contributions were temporarily redirected, non-critical capital projects froze, and flagship programs like Free SHS underwent cost optimization.”
Despite progress, risks linger. Opposition leader Dr. Mahamudu Bawumia criticized the “social cost” of austerity, noting unemployment remains at 14.7%. Meanwhile, the government faces pressure to conclude restructuring with holdout private bondholders controlling $3.1 billion in Eurobonds—a process currently stalled over coupon rate disputes.
Economists caution that sustained recovery hinges on export diversification. “Cocoa and gold still constitute 68% of exports,” warned Accra-based analyst Kofi Mensah. “The new Komenda Agro-Processing Zone must rapidly scale shea butter and cassava exports to cement gains.” With the cedi’s stability attracting renewed portfolio investment—foreign reserves grew by $890 million since January—Ghana’s debt odyssey offers a tentative blueprint for crisis-hit African economies.
