Barclays predicts Ghana will exceed debt reduction goals 3 years ahead

Ghana is expected to surpass its debt reduction goals by three years, with the country’s debt-to-GDP ratio expected to decrease to 54 per cent as of January 2025, as per the new analysis by Barclays Plc. 

If confirmed, this would put Ghana well prior to the 2028 goal aligned with the International Monetary Fund (IMF) as part of a $3 billion bailout package.

In correspondence with clients, Barclays economists Michael Kafe and Andreas Kolbe credited the significant progress to better-than-expected economic development an budgetary discipline. The analysts wrote that “Ghana’s public debt has eased earlier than expected, largely due to a bigger economy and fiscal restraint.” The Bank of Ghana is set to publish data in the coming two weeks.

The projected drop in the debt ratio represents a major achievement for the country, which only two years ago failed to meet debt obligations, prompting the government to seek IMF assistance. Since then, Ghana has undertaken significant budgetary reforms to strengthen the economic.

President John Dramani Mahama, who claimed victory in a decisive elections in the December 2024, has promised to form the foundation of his government’s economic reform program on prudent financial management. His government is targeting a sharp aiming to significantly cut the budget deficit from 7.9 per cent of GDP in 2024 to 3.1 per cent this year.

Regardless a slight month-on-month increase in the total debt stock to GH₵755 billion (about $57.4 billion) in January, the country’s expanding economy is helping reduce debt servicing burden. The increase in debt was mainly due to fresh domestic borrowing of GH₵10 billion and a 4 per cent depreciation of the Ghana cedi against the US dollar. However, Ghana’s nominal GDP is projected to increase to around GH₵1.4 trillion in 2025, up close to GHS1.2 trillion in the previous year, reducing the debt-to-GDP ratio further.

The analysts by the  Barclays warned that public debt may temporarily increase if the government boost investment in key projects . Kafe and Kolbe noted that “Although Ghana is making progress, public debt could increase again as the administration scales up expenditure for key initiatives,”

As per the IMF programme, Ghana is must bring its debt-to-GDP ratio to 55 per cent by 2028. The nation’s initial success of this target will likely restore investors trust and indicate economic resilience  after years of instability. The government must sustain development push, partners and international investors as it focus on building success, drive growth and safeguard fiscal stability.

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