Ghana backs African Monetary Fund to reduce dependence on costly foreign loans – Mahama

President John Dramani Mahama has urged African leaders to back the full rollout of the proposed African Monetary Fund and other regional financial institutions to help reduce the continent’s reliance on foreign borrowing and ease pressure on foreign exchange reserves.

Addressing the First African Union Debt Conference in Lomé, Togo, on Monday, May 12, 2025, President Mahama said African countries like Ghana need stronger regional alternatives to the current global financial system, which he described as structurally tilted against the continent.

“Our countries need access to long-term, affordable finance, but the global financial system remains structurally unfair to Africa,” Mr Mahama said. “We must strengthen African financial institutions like the AfriExim Bank, the African Development Bank, and the proposed African Monetary Fund to offer concessional financing that reflects Africa’s realities.”

The conference, which brought together heads of state, finance ministers, AU commissioners and development partners, was convened to discuss how African nations can manage rising debt while protecting development goals.

Mr Mahama described the current debt conditions facing many African countries as unsustainable, pointing to Ghana’s own experience in recent years. He said poor decisions, especially between 2017 and 2022, had driven Ghana into a difficult debt crisis.

“Ghana, like many of our peers, is still recovering from a painful debt restructuring process,” he noted. “We saw our debt-to-GDP ratio rise sharply due to a combination of excessive borrowing and weak governance.”

According to him, African countries spent over US$90 billion servicing debt in 2024 alone, nearly twice what the continent receives annually in foreign aid, and more than many governments spend on health and education combined.

Mr Mahama said Africa must stop borrowing simply to fill budget gaps and instead direct loans toward productive investments that create jobs, expand exports and strengthen public services.

“Debt must serve the people,” he stated. “That means stronger parliamentary oversight, regular public audits, and greater transparency in how loans are used. Less than 40 per cent of African countries currently publish detailed debt reports. That must change.”

Mr Mahama outlined three main principles for a new approach to public debt management: transparency and accountability, responsible borrowing tied to specific investments, and regional cooperation to secure better financial terms.

He announced that Ghana is moving to establish an independent fiscal council to provide real-time oversight of borrowing decisions and public spending.

He also said the government intends to expand the mandate of the Ghana Infrastructure Investment Fund (GIIF) to help attract private capital into strategic sectors, reducing the need for risky loans.

Mr Mahama urged African countries to adopt a single negotiating position ahead of the 2025 G20 Summit, where debt restructuring for low- and middle-income countries is expected to feature prominently.

“The debt trap is not just an African problem; it reflects deeper issues in how the global financial system works,” he said.

“But we must also take responsibility for the way we borrow and spend. Debt must not be a sentence. It must be a tool for building better lives.”

The African Union Debt Conference was held under the theme “Africa’s Public Debt Management: Agenda in Restoring and Safeguarding Debt Sustainability.”

Participants discussed the state of public finances across the continent and explored ways to reduce debt burdens without halting progress in key sectors.