Ghana’s debt crisis has been a central issue in the country’s economic discourse, with concerns over its sustainability, restructuring, and long-term implications.
Prof. Godfred Bokpin, a Finance Professor at the University of Ghana Business School (UGBS), has cautioned government on its debt relief program outlining its broader consequences. According to him, while the relief measures have provided some short-term stability, they are not a lasting solution.
He cautioned that Ghana may find itself trapped in another cycle of debt distress after the expiration of the current restructuring framework in 2026. He noted that while Ghana reached a staff-level agreement with the IMF on December 12, 2022, the program’s approval was delayed by five months. He added;
“You wouldn’t have gotten the IMF-supported program in the first place without the coming on board of the official creditors, official bilateral creditors—it wouldn’t have happened.”
Prof. Godfred Bokpin, Finance Professor UGBS
This assurance was eventually delivered in May 2023, paving the way for the IMF Executive Board to approve the program on May 17, 2023. He explained;
“What kept it that long? It was simply because we were waiting for official financing assurance from our external bilateral creditors, and that was delivered in May, which then enabled the IMF Board to approve their program.”
Prof. Godfred Bokpin, Finance Professor UGBS
While Ghana managed to secure the IMF deal, Prof. Bokpin pointed out that the IMF has since revised its lending framework due to delays in restructuring efforts in other countries, such as Zambia. This change may influence Ghana’s future engagements with the Fund. Prof. Bokpin highlighted that despite the ongoing debt restructuring efforts, Ghana remains at high risk of debt distress. He cited;
“Ghana’s Debt Sustainability Analysis had already incorporated this news in the December 2024 DSA, which still classified Ghana as high risk of debt distress—both in terms of external debt service and overall debt service.”
Prof. Godfred Bokpin, Finance Professor UGBS
He further explained that, based on forward-looking projections, Ghana is expected to achieve a moderate risk of debt distress by 2028. However, the country’s current debt servicing commitments remain a significant burden. One of the key points raised by Prof. Bokpin was the limited duration of Ghana’s current debt servicing moratorium, which extends only until 2026. He questioned whether the country has the economic resilience to sustain itself beyond this period without another debt restructuring program.
According to him, the fiscal vulnerabilities that Ghana faces will likely become more pronounced after the expiration of the IMF-supported program. He cautioned that the country may have no choice but to seek another bailout.
“If you look at the debt restructuring, after the exit of the IMF-supported program, the fiscal vulnerabilities will begin to crystallize, and the country will have no choice than to resort to another IMF-supported program.”
Prof. Godfred Bokpin, Finance Professor UGBS
Prof. Bokpin argued that this situation was predictable and had been previously highlighted by economic analysts.
The Short-Term Gains vs. Long-Term Sustainability
Prof. Bokpin criticized the government’s approach to debt restructuring, stating that it prioritizes short-term stability over long-term economic resilience. He pointed out that while the restructuring offers temporary relief, it does not address the fundamental weaknesses in Ghana’s debt management. He pointed out;
“Not only the relief from the external debt restructuring, not only the external bilateral. If you take the external commercial in terms of Eurobonds, and then check the domestic debt restructuring, you’ll realize that it was just designed restructuring.”
“So, what we have done actually is to sacrifice our medium to long-term survivability for short-term pretense.”
Prof. Godfred Bokpin, Finance Professor UGBS
According to him, the government should not celebrate the current stability without considering its potential implications beyond 2026.
Professor Bokpin’s analysis presents a sobering outlook on Ghana’s debt situation. While the IMF-supported program and debt restructuring efforts have provided temporary relief, the fundamental issues surrounding debt sustainability remain unresolved.
He warned that without a robust long-term strategy, Ghana could find itself trapped in another debt crisis post-2026. His remarks serve as a call for policymakers to shift focus from short-term fixes to sustainable economic planning that ensures resilience beyond the current debt relief measures.
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