In order to bring Ghana’s debt to sustainable levels that can support the socio-economic development aspirations of the country, Banking Consultant and Financial Analyst, Dr. Richmond Atuahene has noted that the country may need another round of debt restructuring in either 2027 or 2028.
Ghana swallowed the bitter pill in 2022 to embark on its first debt restructuring after debt levels became unsustainable. Financial institutions, pensioners, and other investors of government long-term instruments took a major hit as they were hugely impacted.
The government, through the Ministry of Finance, has reported that the exercise achieved a fiscal savings of GHC 61.7 billion which is approximately 30% of the domestic debt. It further reports that $2 billion in savings were made from restructuring the bilateral debt including other savings.
Despite the postponement and the savings made, repayment is set to resume in earnest as servicing of some commercial debts already began in 2023.
Parts of a research paper by Dr. Atuahene shared with The High Street Journal reveal that, “the repayment schedule for restructured commercial debt started in 2023 with US$ 477 million, US$692 million in 2025; US$1.3 billion in 2026, US$1.1 billion in 2027; US$1.1billion in 2028; US$1.1 billion in 2029; US$937million in 2030; US$838 million in 2031; US$811 million in 2032; US$801million in 2033; US$ 735 million in 2034; US$765 in 2035; US$ 932 million in 2036; US$734 million in 2037 and US$514 million in 2038. Bilateral creditors have more shorter period of their repayment.”
With these debt obligations, the financial analyst has also observed that the government is compounding the debt situation with more new loans which is deteriorating the debt overhang of the country.
As repayment begins, Dr. Atuahene says there are no clear plans or drastic measures the government is implementing now to meet the future debt obligations. Moreover, current revenues, when juxtaposed with the ensuing debt obligations cannot meet the repayment schedules.
“Looking at the country’s meager surrendered gold of US$ 1.2 billion, cocoa export proceeds of US$1.0 billion, inward remittance of US$ 2.8 billion, and non-traditional exports may not be enough the bilateral creditors, multilateral creditors, commercial creditors,” Dr. Atuahene indicated.
Although he admits that the first debt restructuring has resulted in a reduction in Ghana’s debt in terms of its Net Present Value (NPV) and a decrease in interest rates, another restructuring is crucial since the debt overhang is very huge and cannot be met by current revenue streams.
Dr. Atuahene is therefore indicating that to drastically solve the problem of debt unsustainability, the country might need to embark on another restructuring exercise in either 2027 or 2028.
“Ghana may have to consider another debt exchange before the country brings its debt trajectory on a sustainable path. With hindsight, it is clear that the first debt restructuring had led to a stronger reduction in debt in NPV terms. Not only did interest rates decrease after the exchange, but the interest and principal payments still posed a high burden on the country and that Ghana may require a second debt exchange in 2027 or 2028,” parts of the document read.
He added, “The critical phase of the debt overhang could manifest in 2026 where the country will have to service both principal and interest for the bilateral debtors of US$1.08 billion, commercial debtors of average US$ 1.3 billion and some part of the domestic debtors for the next five years.”
This second debt restructuring is needed to create fiscal space or free resources for the government to embark on socio-economic projects and programmes that can positively impact the lives of Ghanaians.
However, despite the sentiments of the Financial Analyst, Ghana’s Public Debt Stock has seen a marginal decline amidst fiscal challenges.
Bank of Ghana’s latest Summary of Economic and Financial Data shows the country’s public debt which stood at GH₵ 807.8 billion in September declined to GH₵ 761 billion at the end of October 2024. This represents a drop from 79.2% to 74.6% of GDP.
