Ghana’s fiscal horizon is facing new turbulence as the World Bank warns of mounting refinancing pressures across Sub-Saharan Africa.
In its latest report, the global lender highlights Ghana as one of the countries that could experience significant stress in managing maturing Eurobonds over the next two years. The report notes that Ghana’s bond redemption profile is set to rise sharply, posing challenges to the country’s debt sustainability and economic recovery efforts.
According to the World Bank, Ghana is expected to redeem US$500 million, equivalent to 0.7% of its Gross Domestic Product (GDP), in 2025. This figure is projected to increase to 1.2% of GDP in 2026, signaling a potential strain on government finances, especially as global financial conditions remain tight and borrowing costs soar.
Ghana’s Eurobond Burden
Ghana, like several emerging market economies, relied heavily on international capital markets to finance its infrastructure and development projects over the past decade. These Eurobond issuances provided much-needed liquidity during periods of fiscal shortfall. However, the downside of such debt accumulation is now becoming evident as maturities near.
The World Bank’s report underscores that Ghana’s upcoming Eurobond redemption will coincide with an already challenging macroeconomic environment. The government is in the process of restructuring its external debt as part of its US$3 billion International Monetary Fund (IMF) support program, aimed at restoring fiscal stability and debt sustainability.
The looming US$500 million payment in 2025 could therefore test the resilience of Ghana’s fiscal strategy, especially if refinancing conditions in the international markets remain unfavorable. Investors have become increasingly cautious about lending to emerging economies with high debt-to-GDP ratios, further complicating Ghana’s refinancing options.
Regional Perspective: Sub-Saharan Africa’s Debt Squeeze
The World Bank’s report does not single out Ghana alone. It paints a broader picture of debt distress across Sub-Saharan Africa, where several economies are grappling with similar refinancing challenges.
South Africa, for instance, is projected to have the largest bond redemptions between 2025 and 2027, totaling about 3.0% of GDP over the period. Senegal also faces notable debt service pressures, with bond redemptions amounting to US$1.1 billion between 2025 and 2028 — nearly one-third of which will mature in 2026.
These figures highlight a troubling trend: the wave of Eurobond issuances between 2015 and 2020 is now coming due, at a time when global financial conditions are tighter than they have been in over a decade. Elevated interest rates in the United States, coupled with heightened geopolitical uncertainties, have significantly raised borrowing costs for developing nations, reinforcing market fragmentation and weakening investor appetite.
The Global Context
According to the World Bank, the elevated funding costs and policy uncertainty in the United States continue to exert pressure on benchmark rates for many countries. This has translated into higher yields for African sovereign bonds, making refinancing existing debt through new issuances increasingly expensive.
The global lender warns that countries such as Ghana could find themselves locked out of international capital markets or forced to accept punitive borrowing terms. “Elevated global risks and tighter financial conditions have raised borrowing costs and reinforced market fragmentation,” the report stated.
This situation has left many African governments with limited fiscal space to maneuver. For Ghana, the options may include seeking concessional loans from multilateral institutions, deepening domestic debt markets, or exploring innovative financing instruments to ease refinancing pressures.
Implications for Ghana’s Economic Stability
The World Bank’s caution comes at a critical time for Ghana’s economy. The government has made significant strides toward macroeconomic stabilization following a tumultuous 2022 that saw the country default on most of its external debt obligations. Inflation, though still elevated, has been on a downward trajectory, while the local currency, the cedi has shown some resilience in recent months.
However, the impending Eurobond maturity could test these gains. A large foreign-currency obligation like the US$500 million bond redemption could exert pressure on Ghana’s reserves and exchange rate if not managed prudently. It could also complicate fiscal consolidation efforts under the IMF program, potentially forcing the government to reprioritize spending or seek additional external support.
Experts believe that Ghana must take proactive steps to mitigate the refinancing risks ahead. These include improving revenue mobilization, enhancing fiscal discipline, and rebuilding market confidence through transparent communication and credible policy execution.
For Ghana and its peers, navigating the coming years will require not just sound fiscal policies, but also coordinated engagement with international creditors and development partners.
As Eurobond maturities approach, governments across Africa will need to strike a delicate balance between servicing debt and sustaining investment in critical sectors like health, education, and infrastructure. The challenge lies in ensuring that debt repayments do not derail long-term growth and poverty reduction goals.
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