Ghana poised to exceed debt reduction target 3 years ahead of schedule – Barclays
Ghana is on track to beat its debt reduction goals by three years, with the country’s debt-to-GDP ratio projected to have dropped to 54 per cent as of January 2025, according to new analysis by Barclays Plc.
If confirmed, this would put Ghana well ahead of the 2028 target agreed with the International Monetary Fund (IMF) as part of a $3 billion bailout package.
In a note to clients, Barclays economists Michael Kafe and Andreas Kolbe credited the unexpected progress to stronger-than-anticipated economic growth and tighter fiscal discipline. “Ghana’s public debt has eased earlier than expected, largely due to a bigger economy and fiscal restraint,” the analysts wrote.
The Bank of Ghana is expected to release official figures within the next two weeks.
The projected drop in the debt ratio marks a significant milestone for the country, which only two years ago defaulted on its external debt, prompting the government to seek IMF assistance. Since then, Ghana has undergone a painful fiscal adjustment process to stabilise the economy.
President John Dramani Mahama, who returned to office following a decisive victory in the December 2024 elections, has pledged to anchor his administration’s economic recovery plan on disciplined fiscal management. His government is targeting a sharp reduction in the fiscal deficit, from 7.9 per cent of GDP in 2024 to 3.1 per cent this year.
Despite a slight month-on-month increase in the total debt stock to GH₵755 billion (about $57.4 billion) in January, the country’s expanding economy is helping reduce the relative burden of the debt. The rise in debt was largely attributed to fresh domestic borrowing of GH₵10 billion and a 4 per cent depreciation of the Ghana cedi against the US dollar.
Nonetheless, Ghana’s nominal GDP is projected to rise to approximately GH₵1.4 trillion in 2025, up from around GHS1.2 trillion in the previous year, easing the debt-to-GDP ratio further.
Barclays analysts cautioned, however, that public debt could temporarily rise again if the government increases spending on major development initiatives. “Although Ghana is making progress, public debt could increase again as the administration scales up expenditure for key initiatives,” Kafe and Kolbe noted.
Under the terms of the IMF programme, Ghana is required to bring its debt-to-GDP ratio to 55 per cent by 2028. The country’s apparent early achievement of this target will likely boost investor confidence and signal a renewed sense of economic stability after years of turbulence.
The government is expected to continue engaging development partners and international investors as it works to consolidate gains, boost growth, and protect its fiscal progress.