Debt maturities, refinancing needs and flagship projects pose medium-term test

By Ebenezer NJOKU

The economy is not yet entirely out of the woods, as a mix of large upcoming debt maturities, substantial domestic refinancing pressures and an expanding roster of flagship government programmes could create strain if not carefully managed.

These observations were highlighted by EM Advisory in its review of the 2026 budget, wherein the firm commended government for the fiscal discipline shown so far but cautioned that sustained prudence will be crucial as the country enters a more demanding medium-term period.

This coincides with the impending exit from the International Monetary Fund’s US$3billion Extended Credit Facility programme in the coming year.

The consultancy pointed to three converging risks: a potential debt crunch around 2027; uncertainty over the feasibility of major growth initiatives such as the Big Push and the 24-hour economy; and the need for caution before Ghana seeks a return to the Eurobond market.

Dr. Abudu Abdul-Ganiyu, Managing Partner and Development Policy Lead at EM Advisory, described the alignment of these obligations as “one of the most consequential fiscal tests Ghana has faced in a decade”.

He noted that while government has taken credible steps to restore macroeconomic stability – achieving a projected primary surplus of 1.6 percent of Gross Domestic Product (GDP), a fiscal deficit near 1.5 percent and moderating inflation to single digits – these gains could be undermined without careful stewardship.

“Those maturing figures are significant and they require serious advance planning. If adequate provision is not made, the situation could become a major problem by 2027. The sinking fund helps and contributions are being made consistently, but the resources are limited and obligations are large,” he said.

This comes as the nation faces a compressed schedule of external debt repayments totalling roughly GH¢20billion in 2026,  GH¢50.3billion in 2027 and GH¢45.8billion in 2028. These repayments come on top of a substantial domestic refinancing burden, with about GH¢137billion in Treasury bills rolled over annually and an expected GH¢71billion of financing needed for the 2026 budget alone.

Additionally, government is seeking to recast its growth agenda around high-impact investments and structural reforms. The 2026 budget outlines a GH¢30billion allocation toward the Big Push infrastructure initiative, expanded funding for oil palm industrialisation and roll-out of the proposed 24-hour economy. Yet the analyst argued that these ambitions must be weighed against the constrained fiscal environment.

Dr. Abdul-Ganiyu expressed concern that the scale of planned projects may exceed the state’s current funding capacity, particularly where feasibility studies, financial appraisals, and risk assessments remain incomplete.

“Project preparation is crucial. If you do not properly evaluate the financial and economic viability of these projects before starting, you risk repeating past mistakes, starting programmes, running out of funds and leaving them in limbo. That is costly and erodes public value,” he said.

He added that transparent project blueprints and well-structured public-private partnership (PPP) arrangements will be essential if government hopes to draw in private sector financing.

Without clear documentation, robust term sheets and realistic execution timelines, he said, investors will be reluctant to participate. “We all want these projects delivered because they can transform the economy. But the approach must be technically sound, transparent and grounded in what is financially feasible.”

The third layer of concern raised by EM Advisory relates to Sovereign’s potential return to the international capital markets. After the 2022–2023 debt crisis and the subsequent restructuring exercise, expectations around market re-entry have been cautious but persistent – particularly given limitations of the domestic market. However, Dr. Abdul-Ganiyu argued that Ghana should not rush this process.

“We cannot rely solely on domestic borrowing; there must be balance between domestic and external sources,” he acknowledged.

“But returning to the Eurobond market must be based on improved indicators, not pressure or sentiment,” he added.

He cited the importance of steady primary surpluses, a credible path to debt sustainability, favourable credit rating actions and durable expenditure discipline as preconditions for a successful re-entry.

According to him, a premature appearance on the market could expose Ghana to prohibitively high interest rates or, worse, signal desperation to investors – undermining the credibility built since 2025. He stressed that Ghana should present a coherent debt management narrative backed by real data, clear project pipelines and proof of institutional discipline.

“It’s all about the ability to pay. If the indicators are strong, the market will respond. But expectations must be managed so government is not pushed into unnecessary spending or premature borrowing.”

The concerns around fiscal overextension, weak project preparation and the looming repayment schedule come despite notable improvements in macroeconomic performance. Inflation continues to decline, the cedi has stabilised relative to past years and growth is projected at 4.8 percent in 2026. Revenue will also expectedly rise to 16.8 percent of GDP.

“Perhaps the most important question about the budget is how its promises will be fulfilled. The revenue projections present an area of concern. The budget assumes total revenue of 16.8 percent of GDP, up from historical averages of around 15 percent – a 1.8 percentage point increase that will be remarkable if achievable. Yet the specifics of how this windfall will materialise remain frustratingly vague,” the firm noted.

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