Ghana’s Debt Obligations: A Breakdown of GH¢150m Domestic and $8.7bn External

Dr. Cassiel Ato Forson, Ghana’s Minister of Finance, outlined significant debt obligations projected for the next four years, primarily due to the Domestic Debt Exchange Programme. The country faces over GH¢150 billion in domestic debts and $8.7 billion in external debts, with critical payments concentrated in 2027 and 2028. He emphasized the commitment to address these challenges and transform the economy.

During the presentation of the 2025 Budget and Economic Policy statement, Dr. Cassiel Ato Forson, Minister of Finance, elaborated on Ghana’s debt obligations over the next four years, a result of the debt restructuring initiated by the government under Nana Addo Dankwa Akufo-Addo. He indicated that owing to the Domestic Debt Exchange Programme (DDEP), the country is required to pay over GH¢150 billion between 2027 and 2028.

Dr. Ato Forson noted that the domestic debt service payments would reach approximately GH¢150.3 billion, equating to 11.6% of GDP, with a significant portion of payments – 73.3% – due in 2027 (GH¢57.6 billion) and 2028 (GH¢52.5 billion). He underscored that these obligations represent critical economic risks, describing the payments as “major humps” that are “cancerous” to the economy, which the government is committed to addressing.

Additionally, the finance minister revealed that the government anticipates external debt service obligations exceeding $8.7 billion, demonstrating a notable 10.9% of GDP, with a concentrated burden in 2027 and 2028. Most alarmingly, 55% of this external debt, approximately $4.9 billion, is due for service in those years.

Dr. Ato Forson expressed that the restructuring actions of the Akufo-Addo administration have made 2027 and 2028 particularly debt-laden years for the nation. He affirmed the commitment of the Mahama administration to meet these challenges head-on and foster economic transformation in Ghana.

The DDEP, introduced by Ken Ofori-Atta on December 4, 2022, comprised measures to address debt sustainability as articulated in the 2023 budget presented earlier to Parliament. The restructuring involved exchanging existing domestic bonds for new ones with varied maturity dates and coupon payment terms, aiming to alleviate the debt burden on Ghanaian entities. Notably, bonds maturing in 2023 were substituted with new bonds scheduled for maturity in 2027, 2029, 2032, and 2037. The terms outlined included a temporary 0% interest rate in 2023, escalating to 5% in 2024, and 10% in 2025 until bond maturity.

The Ghanaian government is currently facing significant debt obligations, including GH¢150 billion in domestic payments and over $8.7 billion in external commitments, primarily due in 2027 and 2028. This situation is attributed to the recent debt restructuring efforts initiated by the previous administration. Despite these challenges, the government is determined to manage these obligations and work towards an economic turnaround, showcasing resilience amid financial pressures.

Original Source: www.ghanaweb.com