Ghana’s debt restructuring efforts to improve debt sustainability

Ghana’s debt has steadily increased since 2013 but took a harrowing spike at the end of 2020. Over these seven years, Ghana not only breached the International Monetary Fund’s (IMF) recommended debt-to-GDP ratio of 70% but also recorded a staggering debt service-to-revenue ratio of 127%, compared to its 55% threshold.

By 2022, Ghana’s debt-to-GDP ratio was 88.1%, with a debt service-to-revenue ratio ranging from 70%-100%. According to the IMF, Ghana owes approximately $5.4 billion to bilateral creditors, including about $1.9 billion to China. However, a more substantial portion of the debt, approximately $13.1 billion, is owed to Eurobond holders. Additionally, Ghana carries a significant debt burden of around $34.5 billion of domestic debt, primarily owed to commercial banks and the Bank of Ghana (BOG).

Stears takes a concise dive into the key drivers behind Ghana’s colossal debt and evaluates the potential of debt restructuring to alleviate the country’s debt burden.