Ghana’s debt outlook continues to face significant downside risks even as recent developments point to measurable progress in restructuring efforts.
According to the World Bank, the country still grapples with notable debt vulnerabilities despite its upgrade from “debt distress” to “high risk of debt distress” in November 2024.
This assessment reflects a delicate balance between recovery and uncertainty. While Ghana has made strides in stabilising its macroeconomic environment, the underlying structural weaknesses in its debt profile remain a source of concern.
The World Bank’s latest report on Sub Saharan Africa underscores that ongoing negotiations with commercial creditors and lingering financial sector pressures continue to shape the country’s debt trajectory.
Progress under the Common Framework
One of the key highlights in Ghana’s debt restructuring journey is its progress under the G20 Common Framework. The World Bank notes that the Framework’s operational efficiency has improved compared to earlier cases, offering a more coordinated and predictable process for debt treatment.
Ghana has reached a significant milestone, with more than 95 percent of required debt treatment agreed by October 2025. In addition, four bilateral agreements were successfully signed by the end of September 2025. These developments signal strong engagement with creditors and a commitment to restoring debt sustainability.
The experience of other African countries such as Chad, Ethiopia and Zambia also suggests that the Framework is gradually becoming more effective. However, despite these improvements, the pace and complexity of negotiations continue to pose risks, particularly in finalising agreements with commercial creditors.
Debt stock declines but risks remain
Recent data shows a notable reduction in Ghana’s debt stock. The country’s total debt declined by GH¢85.7 billion year on year to GH¢641.0 billion in December 2025. This translates to 45.3 percent of Gross Domestic Product, indicating a positive shift in debt sustainability indicators.
While this decline offers some relief, it does not eliminate the risks associated with Ghana’s debt burden. The sovereign bank nexus, which weakened following the domestic debt exchange programme, remains a critical area of concern. This interconnection between government finances and the banking sector has implications for financial stability and credit conditions in the economy.
The progress achieved so far must therefore be viewed within the broader context of ongoing reforms and external uncertainties. Without sustained fiscal discipline and continued creditor cooperation, the gains made could be reversed.
Improving fiscal outlook and primary balance
Ghana’s fiscal outlook has shown encouraging signs, particularly in its primary balance. The country is projected to record the largest improvement in primary balance among its peers between 2024 and 2026.
According to the Bank of Ghana, the primary balance stood at negative 3.1 percent of GDP. However, this is expected to strengthen by 0.8 percentage points over the forecast period. This improvement reflects ongoing fiscal consolidation efforts aimed at reducing expenditure pressures and enhancing revenue mobilisation.
A stronger primary balance is essential for restoring debt sustainability, as it indicates the government’s ability to meet its obligations without relying excessively on new borrowing. Nonetheless, achieving and maintaining this improvement will require consistent policy implementation and effective management of public finances.
Downside risks to economic outlook
Despite the positive indicators, the World Bank cautions that Ghana’s economic outlook remains exposed to significant downside risks. Across Sub Saharan Africa, economic activity is gradually improving, but the risk environment is still tilted towards adverse outcomes.
Political uncertainties, global trade disruptions, climate related shocks and rapid technological changes all pose potential threats to Ghana’s recovery path. These risks could affect export performance, fiscal revenues and overall economic stability.
The report highlights that while negative shocks are more likely, there are also opportunities for growth and resilience. Strategic policy actions and strong institutional frameworks will be crucial in navigating these challenges and maximising potential gains.
The path forward for debt sustainability
Ensuring long term debt sustainability in Ghana will depend on a combination of domestic reforms and external support. Strengthening fiscal discipline, improving public financial management and enhancing transparency will be key pillars in this effort.
Equally important is the need to complete ongoing debt restructuring negotiations, particularly with commercial creditors. A comprehensive and timely resolution will provide greater clarity and restore investor confidence in the Ghanaian economy.
In addition, policies aimed at boosting economic growth, diversifying exports and strengthening the financial sector will play a vital role in reducing vulnerability to external shocks. The government’s ability to implement these measures effectively will determine the sustainability of current gains.
Ghana’s debt outlook presents a complex picture of progress and persistent risk. While the country has achieved significant milestones in its restructuring process and fiscal consolidation efforts, the challenges ahead remain substantial.
READ ALSO: CDD Fellow: Free Primary HealthCare Best Thing to Happen to Ghana’s Health System
