Ghana: IMF forecasts 13.9% reduction in debt-to-GDP over the next six years

The International Monetary Fund (IMF) has projected a steady decline in Ghana’s debt-to-Gross Domestic Product (GDP) ratio over the next six years, according to its April 2024 Fiscal Monitor.

The Fund anticipates the ratio to drop to 69.7% by 2029 from the current debt-to-GDP ratio of 83.6% marking a 13.9% drop in Ghana’s total public debt over the six-year period.

The debt-to-GDP ratio projections for 2025, 2026, 2027, and 2028 stand at 80.9%, 77.9%, 74.9%, and 72.0%, respectively.

Stephane Roudet, Mission Chief for Ghana speaking on Ghana’s economy on the sidelines of the IMF/World Bank April Spring Meetings, highlighted the positive impact of government policies and reforms aimed at restoring macroeconomic stability and debt sustainability.

“On the fiscal front, consistent with the authorities’ commitments under the IMF-supported program, the fiscal primary balance on a commitment basis improved by over 4 percentage points of GDP in 2023 and is on track to achieve a fiscal primary surplus of ½ percent of GDP in 2024,” he stated.

He also noted that Ghana has successfully expanded social protection programs and met its non-oil revenue mobilization target while making strides in implementing structural fiscal reforms to bolster domestic revenues, strengthen public financial and debt management, and enhance transparency.

In a significant move towards debt management, Ghana has secured a Memorandum of Understanding (MoU) with its bilateral creditors for the restructuring of its $5bn debt, following a previous “deal” in January on the terms for restructuring the debt.

The MoU which has been secured combined with domestic debt restructuring, is aimed at reducing the country’s debt servicing costs.

According to the Bank of Ghana’s March 2024 Summary of Economic and Financial Data, Ghana’s public debt stood at GH¢610 billion ($52.4 billion) at the end of 2023.

This marked an increase of GH¢42.7 billion from September to December 2023, after a decrease of ¢14.2 billion between June and September 2023, bringing the total public debt stock to 72.5% of GDP.

Despite completing the Domestic Debt Exchange Programme during the period, the domestic debt rose by GH¢19.1 billion, while the external debt increased by GH¢23.6 billion, largely due to cedi depreciation.

The data suggests that Ghana’s debt situation has yet to show improvement, despite the efforts in debt management and restructuring.