Editorial: Public debt-to-GDP drops markedly

Latest figures from the Bank of Ghana (BoG) show that total public debt declined by GH¢113.7billion within a six-month period.

The country’s public debt-to-GDP (Gross Domestic Product) ratio dropped to 43.8 percent at end-June 2025, down markedly from 61.8 percent in December 2024 on account of strong currency appreciation, nominal GDP growth and fiscal restraint.

External debt-to-GDP ratio dropped to 21.4 percent in June from 35.4 percent in December, according to the BoG’s July Summary of Economic and Financial Data. The share of external debt in total public debt fell below 50 percent for the first time in years, improving Ghana’s debt sustainability metrics.

In presenting the mid-year budget to parliament, Dr.  Cassiel Ato Baah Forson described the development as unprecedented. “For the first time in Ghana’s history, we have recorded a negative debt accumulation rate of 15.6 percent,” he stated.

Government has introduced new fiscal rules to maintain the trend. These include amendments to the Public Financial Management Act to cap the debt-to-GDP ratio at 45 percent by 2034 and enforcing an annual primary surplus of at least 1.5 percent of GDP.

Additionally, an Independent Fiscal Council will be established to monitor compliance with the rules.

On the domestic front, disinflation has taken hold, with headline inflation easing to 13.7 percent in June; its lowest level since 2021. Economic activity is also recovering, with first-quarter real GDP growth reaching 5.3 percent driven by agriculture and services. Non-oil GDP expanded by 6.8 percent.

Debt service payments have remained on track. About US$700million has been paid to Eurobond holders in 2025 while GH¢9.8billion has been disbursed as coupons to domestic bondholders, including GH¢3.6billion in capitalised interest under the DDEP.

Indeed, government has reiterated its commitment to meeting all debt obligations.

Coupled with the above, the cedi appreciated by more than 42 percent year-to-date against the US dollar by End-June; helping to reduce the domestic value of foreign-denominated debt.

In cedi terms, external debt stock fell to GH¢300.3billion from GH¢416.8billion in December, although the dollar value of debt remained broadly unchanged at just over US$29billion.

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