Ghana’s Public Debt Hits GH¢674billion as Cedi Depreciation Adds GH¢13.5billion to External Debt

Ghana’s total public debt rose to GH¢674.1 billion as of March 2026, equivalent to 42.2 per cent of Gross Domestic Product (GDP), driven by a combination of domestic borrowing, the cedi’s depreciation against major currencies, and legacy obligations from previous years, according to the latest Summary of Economic and Financial Data released by the Bank of Ghana.

The debt stock, which stood at GH¢641.1 billion at the end of December 2025, increased by GH¢33 billion in the first three months of 2026 alone.

The external component of the debt was recorded at GH¢313.6 billion (19.6 per cent of GDP), while domestic debt stood at GH¢360.4 billion (22.6 per cent of GDP).

The cedi’s depreciation of 8.4 per cent against the US dollar between January and May 2026 has contributed significantly to the increase in the cedi value of external debt, even when the underlying US dollar-denominated obligations remained relatively stable.

External Debt
External debt, measured in US dollar terms, stood at US$29.3 billion as of March 2026, largely unchanged from US$29.4 billion at the end of 2025.

However, the weakening of the cedi from GH¢10.95 to GH¢11.41 per dollar during the period increased the cedi equivalent of this external debt by approximately GH¢13.5 billion.

The Heritage and Stabilisation Fund, set aside to cushion the economy against commodity price shocks, was valued at US$1.53 billion, equivalent to GH¢16.7 billion.

Domestic Debt Dynamics
Domestic debt increased by GH¢26.6 billion in the first quarter of 2026, rising from GH¢333.8 billion in December 2025 to GH¢360.4 billion in March 2026.

This increase reflects new issuances of government securities to finance the budget deficit, as well as the capitalisation of interest on outstanding instruments.

The government has been actively issuing treasury bills and bonds to meet its financing requirements, with total public debt service obligations remaining a significant portion of annual government expenditure.

Debt-to-GDP Ratio
Despite the nominal increase in the debt stock, Ghana’s debt-to-GDP ratio of 42.2 per cent remains well below the 55 per cent threshold set under the Fiscal Responsibility Act, and significantly lower than the peak of 85 per cent recorded during the 2022-2023 economic crisis.

The improvement in the debt-to-GDP ratio from 53.8 per cent at the end of 2025 to 42.2 per cent in March 2026 is primarily driven by rebasing of nominal GDP, which increased the denominator in the ratio calculation. Annual nominal GDP was estimated at GH¢1,400 billion in 2025.

Fiscal Deficit
The government’s overall fiscal balance on a commitment basis recorded a deficit of 0.1 per cent of GDP in the first quarter of 2026, within the annual target range.

The primary balance, which excludes interest payments, recorded a surplus of 1.2 per cent of GDP for the same period.

Total revenue and grants for the quarter stood at 3.6 per cent of GDP, while total expenditure was recorded at 3.9 per cent of GDP. Capital expenditure remained subdued at 0.5 per cent of GDP, reflecting the government’s continued focus on fiscal consolidation.

Interest Costs Elevated
Despite the decline in interest rates across treasury instruments, the cost of servicing the public debt remains a significant burden on the national budget.

The average lending rate fell to 16.33 per cent in April 2026, down from 27.40 per cent a year earlier, while the 91-day Treasury bill rate declined to 4.90 per cent from 15.47 per cent in April 2025.

However, the large stock of domestic debt means that interest payments continue to consume a substantial portion of government revenue, limiting fiscal space for capital investment and social spending.

IMF Programme Completion
Ghana successfully completed its three-year IMF-supported Extended Credit Facility programme in early 2026, a milestone that has helped restore market confidence and improved the government’s access to international capital markets.

The successful completion of the programme, achieved with all performance criteria met, has allowed the government to rebuild buffers and reduce its reliance on domestic borrowing. Gross international reserves stood at US$13.95 billion in April 2026, sufficient to cover 5.5 months of imports.

Debt Sustainability Outlook
The government has committed to maintaining the debt-to-GDP ratio below the 55 per cent threshold and has outlined a medium-term debt management strategy focused on extending the maturity profile of domestic debt, reducing exposure to exchange rate risk, and diversifying funding sources.

However, the sharp rally in crude oil prices, which surged 67.4 per cent year-to-date to US$103.20 per barrel, could pressure the external accounts and the cedi, potentially leading to higher-than-anticipated external debt service costs.

Additionally, the 43 per cent decline in cocoa prices to US$3,350 per tonne will reduce export receipts and could widen the current account deficit.

The Bank of Ghana’s continued accumulation of international reserves and the government’s adherence to fiscal discipline will be critical to maintaining debt sustainability in the face of these external headwinds.

Source: Graphic Online

Click to read more: https://opemsuo.com/author/hajara-fuseini/