Ghana’s debt policy and management performance has come under sharp scrutiny following a damning assessment by the World Bank.
According to the 2024 Country Policy and Institutional Assessment (CPIA) report, the West African nation ranked 29th out of 39 Sub-Saharan African (SSA) countries in debt policy and management, earning a low score of just 2.5%. The report paints a worrying picture of Ghana’s fiscal management practices amidst rising debt vulnerabilities and dwindling investor confidence.
Topping the CPIA rankings was Benin, with a debt management score of 4.5%, followed by Côte d’Ivoire and Burkina Faso in second and third places, respectively. These countries, according to the World Bank, have demonstrated prudent and innovative approaches to public debt management, leveraging concessional loans and proactive strategies to manage debt maturity and reduce financing costs.
Côte d’Ivoire, for example, implemented a successful Eurobond issuance and buyback strategy in early 2024, coupled with the region’s first-ever debt-for-development swap guaranteed by the World Bank. This allowed the country to retire expensive debt and replace it with more affordable, partially guaranteed financing.
Ghana’s Lagging Performance
In stark contrast, Ghana’s position in the lower echelons of the rankings is indicative of poor debt management structures, lack of strategic liability operations, and a heavy dependence on short-term and costly domestic financing. The CPIA score of 2.5% places Ghana far behind regional peers like Nigeria, Mali, Rwanda, and Tanzania, all of whom scored 4.0%.
The World Bank’s report noted that large debt maturity payments continue to expose countries like Ghana to rollover risks and liquidity constraints in increasingly tight global credit conditions. The situation has been exacerbated by the country’s limited access to international capital markets and its ongoing engagement with the International Monetary Fund (IMF) for debt restructuring and support.
The World Bank highlighted how poor debt structuring can become a time bomb for economies already facing fiscal stress. The report warned that upcoming large maturity payments could force Ghana to refinance under unfavorable terms, further straining its reserves and debt servicing capacity.
In comparison, countries like Kenya, despite also facing high debt levels, managed to calm market jitters by executing a successful Eurobond issuance in February 2024. This allowed Nairobi to buy back a US$2.0 billion Eurobond before its June maturity, avoiding panic in the forex market and showcasing effective debt management.
Lessons from the Best: Strategic Debt Operations
The CPIA praised nations like Benin and Côte d’Ivoire for conducting active liability management operations, including buybacks and exchanges that reduce liquidity pressures and extend maturity profiles. Such measures are vital in insulating economies from external shocks and market volatility.
Benin, the report revealed, effectively used concessional borrowing and restructured liabilities to improve its overall debt profile. These countries also maintained strong institutional frameworks and transparency in debt reporting—areas in which Ghana was found to be lacking.
One bright spot in the report was the increasing role of multilateral lenders in providing concessional financing to low-income countries. Since 2020, multilateral debt inflows to International Development Association (IDA) countries in SSA have surged from US$6 billion in 2012 to US$20 billion in 2023.
This trend, according to the World Bank, demonstrates a sustained commitment to development financing by institutions such as the World Bank, IMF, and African Development Bank (AfDB). However, Ghana’s ability to maximize these resources depends on its willingness to implement meaningful fiscal and institutional reforms.
Ghana’s poor showing in the CPIA rankings should serve as a wake-up call for policymakers. With a debt-to-GDP ratio exceeding sustainable thresholds and increasing debt servicing costs consuming a large share of national revenue, the country must urgently adopt best practices in debt management.
This includes exploring concessional financing, adopting proactive liability operations, and strengthening institutional capacity to manage debt sustainably. Transparent reporting, improved governance, and long-term planning are essential if Ghana is to regain market confidence and climb the CPIA rankings in the years ahead.
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