Ghana’s fiscal outlook remains challenging as Finance Minister Dr. Cassiel Ato Forson disclosed during the 2025 budget reading that the country will pay GH¢150.3 billion in domestic debt service obligations over the next four years.
This figure represents 11.6% of Ghana’s Gross Domestic Product (GDP). The debt service burden is particularly severe in 2027 and 2028, with GH¢57.6 billion and GH¢52.5 billion due, respectively.
Dr. Forson described the debt service obligations for 2027 and 2028 as “cancerous humps” that pose significant risks to Ghana’s economic stability. He assured that the government would take measures to address these concerns. However, the burden extends beyond these future obligations, as the country faces pressing financial challenges in the current fiscal year.
For 2025, major debt service obligations fall in February (GH¢9.9 billion), July (GH¢6.2 billion), and August (GH¢10.1 billion). Compounding these pressures, Ghana has inherited substantial short-term treasury bill maturities totaling GH¢111.1 billion. These obligations require frequent rollovers, adding strain on the country’s cash flow and liquidity management.
Ghana’s External Debt Service Obligations
Beyond domestic debt, Ghana must also meet significant external debt obligations over the next four years, amounting to US$8.7 billion, equivalent to 10.9% of GDP. A substantial portion of this—55% or US$4.9 billion—falls due in 2027 (US$2.5 billion) and 2028 (US$2.4 billion).
The heavy concentration of both domestic and external debt repayments in the latter part of the decade presents a formidable challenge for Ghana’s economic managers. If not handled effectively, these obligations could impact macroeconomic stability, investor confidence, and the country’s ability to fund essential services and development projects.
At the end of December 2024, Ghana’s total central government arrears and payables stood at GH¢67.5 billion, representing 5.2% of GDP. A significant portion of this—GH¢21 billion—is owed to the road sector.
Upon assuming office on January 23, 2025, Dr. Forson’s ministry was overwhelmed with payment requests from government contractors and suppliers. In response, the Ministry of Finance conducted a validation exercise to determine the full extent of outstanding claims. The review found that GH¢49.2 billion consists of unpaid Interim Payment Certificates and invoices, while GH¢18.3 billion represents outstanding Bank Transfer Advice at the Controller and Accountant-General’s Department.
However, these figures exclude several additional liabilities. The government owes US$1.73 billion to Independent Power Producers (IPPs), GH¢68 billion to the Electricity Company of Ghana (ECG), and GH¢32 billion to the Ghana Cocoa Board (COCOBOD). Additionally, the Road Fund has an outstanding debt of GH¢5.75 billion.
Beyond these obligations, the Bank of Ghana has also requested a bailout of approximately GH¢53 billion to address its negative equity position. These mounting liabilities highlight the fiscal pressures facing the new administration and the urgent need for financial restructuring.
IMF Program and Economic Performance
To manage these growing liabilities, the government has initiated an audit of all arrears and payables to ensure value for money before making payments. However, the validation process also revealed that Ministries, Departments, and Agencies (MDAs) have committed the government to contracts totaling GH¢194 billion—16.5% of GDP—with the road sector alone accounting for over GH¢100 billion.
Dr. Forson attributed this situation to weak commitment control systems and reckless public spending, which have undermined Ghana’s fiscal consolidation efforts. Despite the implementation of an IMF-supported program in 2023, the country’s economic health remains fragile due to past fiscal mismanagement.
The IMF-supported program, which came at a high cost to domestic bondholders, external creditors, and taxpayers, has not yet yielded the desired results. Inflation worsened in 2024, rising from 23.2% in 2023 to 23.8%—far exceeding the budgeted target of 15% and the IMF’s central target of 18%. This deviation has triggered discussions with the IMF under the Monetary Policy Consultation Clause.
Furthermore, the primary balance on a commitment basis deteriorated from a deficit of 0.2% of GDP in 2023 to a deficit of 3.9% in 2024. The target for 2024 was a surplus of 0.5% of GDP, meaning Ghana experienced a fiscal slippage of 4.4 percentage points.
Ghana’s fiscal situation presents a complex challenge that requires decisive action. With mounting debt service obligations, growing arrears, and worsening macroeconomic indicators, the government must implement stringent measures to restore fiscal discipline.
The success of these efforts will depend on improving revenue collection, curbing wasteful expenditures, and enforcing stricter financial controls across government agencies. Additionally, structural reforms will be needed to address inefficiencies in public sector financial management, ensuring that Ghana can meet its debt obligations without compromising economic growth and social development.
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