Ghana’s public debt narrative has taken an unexpected turn, renewing concerns from the International Monetary Fund (IMF) and economic analysts as the country’s debt-to-GDP ratio climbed again in October 2025.
After months of steady decline, which had been hailed as one of the most significant fiscal turnarounds in recent years, the latest figures released by the Bank of Ghana suggest that the road to debt sustainability remains fragile and uncertain.
The Bank of Ghana’s November 2025 Summary of Economic and Financial Data shows that Ghana’s total public debt rose to GHS 684.6 billion in October, up from GHS 655.9 billion in September. This increase represents a clear reversal from the encouraging trend observed throughout the first nine months of the year.
At the beginning of 2025, Ghana’s public debt had peaked at an alarming GHS 810 billion, equivalent to 68.9% of GDP. Through sustained fiscal consolidation efforts, enhanced revenue collection, and tightened borrowing controls, the government managed to drive this figure down to 46.8% of GDP by September.
October’s rise, however, has pushed the debt-to-GDP ratio back up to 48.9%, raising concerns within policy circles and international institutions overseeing Ghana’s economic reform programme. Though the increase may seem moderate, it signals a break in the downward momentum that had boosted confidence in Ghana’s fiscal recovery.
External Debt Pressures Intensify
A closer look at the numbers reveals that the latest debt increase is predominantly the result of rising external debt. Ghana’s external obligations climbed from GHS 333.3 billion in September to GHS 367.0 billion in October. In dollar terms, the increase was relatively marginal—from USD 29.2 billion to USD 29.5 billion—but the depreciation of the cedi significantly amplified the burden in local currency.
This surge in external debt appears to be driven by a combination of exchange rate pressures, accumulated interest on restructured external loans, and the release of funds for donor-supported infrastructure and social development projects.
While such disbursements contribute to long-term development goals, they also compound short-term fiscal challenges, especially when the local currency weakens. Even so, external debt as a share of GDP remains far lower than at the start of the year, standing now at 26.2%, compared to 43.2% in January.
Domestic Debt Stability Offers Temporary Comfort
In contrast to the external debt pressures, Ghana’s domestic debt position has shown relative stability. Domestic debt closed October at GHS 317.6 billion, slightly reduced from GHS 322.6 billion in September. This reflects the government’s continued restraint on domestic borrowing following the Domestic Debt Exchange Programme (DDEP), which aimed to ease liquidity pressures on the financial sector.
The stability in domestic debt signals a cautious recovery of confidence within the local financial system. Lending conditions have eased in recent months, and banks are beginning to expand credit to the private sector—an important shift from the tight monetary environment of previous years.
The current domestic debt level accounts for 22.7% of GDP, down from 25.6% at the beginning of 2025, demonstrating progress in rebalancing debt sources and reducing stress on the domestic economy.
Debt-to-GDP Ratio Improves but Remains Vulnerable
Despite the October reversal, Ghana’s overall debt-to-GDP position in 2025 remains significantly better than during the previous year. From January to September, the ratio fell steadily, dropping from a high of 68.9% to 46.8%. It then rose slightly to 48.9% in October.
This remarkable improvement of nearly 20 percentage points reflects the combined effects of improved nominal GDP—maintained at GHS 1.4 trillion following the statistical rebasing—reduced domestic borrowing, and ongoing negotiations around external debt restructuring.
However, the renewed upward movement has raised doubts about how secure these gains truly are. Economists warn that the October data illustrates how quickly progress can be undermined by currency fluctuations, global financial instability, and delays in restructuring talks.
Experts Warn Against Complacency
While acknowledging the substantial progress made, several economists caution that the country cannot afford complacency. Exchange rate volatility continues to pose a major risk, especially given Ghana’s heavy reliance on external borrowing.
Rising global interest rates threaten to increase the cost of future financing, while unresolved issues—such as energy sector arrears and contingent liabilities—could further strain the national budget. Analysts also note that delays in external debt restructuring could prolong uncertainty and slow fiscal consolidation.
The IMF, which has supported Ghana’s reform agenda since 2023, is expected to pay close attention to these developments as the country prepares its fiscal framework for the 2026 budget cycle.
A Stable Yet Fragile Path Ahead
In the intervening time, analysts believe Ghana’s public debt is likely to remain within the 45% to 50% of GDP range for the remainder of 2025. The country’s performance still reflects a major improvement compared to the distressing levels seen earlier in the year.
However, the October rise underscores the need for continued discipline in revenue mobilization, expenditure control, and foreign exchange management.
All in all, sustaining the gains made will require steadfast commitment, strong reforms, and unwavering vigilance from policymakers as the nation circumvent a fragile path toward long-term fiscal stability.
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