Ghana Set to Surpass Debt Reduction Target Three Years Early, Says Barclays

Ghana is on course to achieve its debt reduction goal well ahead of schedule, with its debt-to-GDP ratio expected to have fallen to 54% by January 2025, according to a recent analysis by Barclays Plc. This projection, if confirmed by official data from the Bank of Ghana due soon, places Ghana significantly ahead of the 55% target set for 2028 under its $3 billion IMF bailout agreement.

Barclays economists attribute this faster-than-anticipated progress to stronger economic growth and disciplined fiscal management. They noted that Ghana’s public debt has eased earlier than expected due to a larger economy and fiscal restraint. This milestone is particularly notable given Ghana’s external debt default just two years ago, which led to the IMF-supported fiscal adjustment program aimed at stabilizing the economy.

President John Dramani Mahama, who returned to office after the December 2024 elections, has emphasized disciplined fiscal policy as central to his administration’s economic recovery plan, targeting a reduction in the fiscal deficit from 7.9% of GDP in 2024 to 3.1% in 2025. Although total debt stock slightly increased to GH₵755 billion (around $57.4 billion) in January due to domestic borrowing and currency depreciation, the expanding economy is lowering the debt burden relative to GDP.

Ghana’s nominal GDP is projected to rise to about GH₵1.4 trillion in 2025, up from GH₵1.2 trillion the previous year, further easing the debt ratio. However, Barclays cautioned that public debt could rise again if the government increases spending on major development projects.

This early achievement of the IMF debt target is expected to boost investor confidence and signal renewed economic stability after years of financial turbulence. The government plans to continue working with development partners and international investors to consolidate gains, promote growth, and maintain fiscal discipline.

This progress follows a significant milestone in Ghana’s debt restructuring process, where all 25 official creditor countries signed a Memorandum of Understanding, enabling debt service relief and paving the way for sustainable debt levels below 55% of GDP by 2028. The government is also negotiating with commercial creditors to complete the restructuring.

Overall, Ghana’s debt outlook is improving, supported by fiscal reforms, economic growth, and ongoing debt restructuring efforts, positioning the country for a more stable and sustainable economic future