External Exposure Still High Despite Gains in Domestic Consolidation
Ghana’s total public debt stock has seen a historic reduction in the first half of 2025, shedding GH¢139 billion in six months—a development authorities attribute to deliberate fiscal reforms, improved macroeconomic fundamentals, and relative currency stability.
According to new data published by the Bank of Ghana, the debt figure dropped from GH¢752.1 billion in January to GH¢613.0 billion by the end of June, representing a 19% decrease. The marginal increase from GH¢612.1 billion in May does little to offset the overall downward trend.
External Debt Still Dominates, Currency Risks Persist
Despite the improvement, external debt remains the dominant component of Ghana’s liabilities, posing continuing risks to fiscal stability. By June, external debt stood at GH¢300.3 billion—accounting for 21.4% of GDP—up from GH¢296.2 billion in May.
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In dollar terms, the external debt now totals US$29.1 billion, reflecting vulnerabilities linked to exchange rate fluctuations and the cost of servicing foreign obligations.
Domestic Debt Sees Modest Contraction
On the domestic front, debt dropped to GH¢312.7 billion in June, down from GH¢315.6 billion in May.
This decline, though marginal, signals improved fiscal consolidation and a likely slowdown in local bond issuance—two critical pillars of the government’s debt management strategy.
Debt-to-GDP Ratio Drops Significantly
Ghana’s public debt-to-GDP ratio held at 43.8% in June—down from 66.8% recorded during the same period in 2024.
Analysts suggest the sharp fall is partly due to GDP rebasing, as well as targeted efforts to contain spending, boost domestic revenue mobilisation, and limit high-cost borrowing.
Experts Caution: Reforms Must Continue
While the markets have responded positively to the reduction in the debt burden, economists warn that the sustainability of this progress hinges on structural reform. Ghana’s high dependence on external financing continues to expose it to global headwinds such as tightening interest rates and currency depreciation.
To preserve recent gains, analysts recommend a strict adherence to fiscal discipline, a boost in concessional financing, and effective management of foreign reserves.
“This is a positive step in the right direction, but the work is far from over,” said a senior economic analyst in Accra. “Debt sustainability requires not only reduced borrowing but also long-term structural resilience.”
