- Debt Servicing Falls from Above 50% of Revenue as Ghana’s Fiscal Position Improves
Ghana has reduced the share of government revenue absorbed by debt servicing to below 20.00%, from more than 50.00% at the height of its fiscal crisis, marking one of the clearest signs yet that debt restructuring and fiscal consolidation are beginning to create room for other public spending priorities.
Finance Minister Dr Cassiel Ato Forson said the improvement reflected progress in restoring debt sustainability after a period in which interest and principal repayments consumed more than half of national revenue and sharply constrained expenditure on infrastructure and essential public services.
“In the past, Ghana spent over 50 percent of its national revenue on servicing debt,” Dr Forson said.
“This left less money for schools, hospitals, roads and other essential infrastructure.”
A government committing more than half of its revenues to debt service has limited flexibility to respond to shocks, maintain public infrastructure or expand social programmes. Reducing that burden to below one-fifth of revenue potentially changes the structure of Ghana’s fiscal position by freeing a greater share of public resources for other obligations.
“Today, I am proud to say that we have made significant progress. We now spend less than 20 percent of our revenue on servicing debt!” the Finance Minister said.
The improvement follows Ghana’s restructuring of domestic and external liabilities after the government suspended payments on much of its external debt in December 2022.
That crisis effectively shut Ghana out of international capital markets, weakened confidence in the sovereign balance sheet and eventually pushed Accra into a US$3.00 billion programme with the International Monetary Fund.
The restructuring altered Ghana’s repayment profile by extending maturities and reducing near-term debt-service pressures, while the government simultaneously pursued fiscal consolidation aimed at restoring confidence and reducing financing needs.
Public debt stood at about 44.70% of gross domestic product at the end of 2025, compared with 61.80% a year earlier, according to figures presented by the Finance Minister in the 2026 mid-year fiscal review. That represents a decline of 17.10 percentage points in one year.
But the reduction in the debt-service-to-revenue ratio needs to be interpreted carefully. Part of the improvement reflects the restructuring of obligations rather than the permanent disappearance of liabilities.
Rescheduled repayments reduce immediate pressure on the budget, but the debt still exists and eventually matures. Ghana’s current fiscal space is therefore partly a function of timing. If government maintains strong primary balances, improves revenue collection and restrains new borrowing, the current breathing room could become durable.
If debt accumulation accelerates again, the present improvement could prove temporary. That risk becomes more important as Ghana prepares to rebuild a medium- and long-term domestic borrowing market.
The government has also continued making payments associated with the Domestic Debt Exchange Programme, with cumulative DDEP payments since 2025 reaching about GH¢41.36 billion.
The fiscal transition is therefore not simply a story of falling debt ratios. Ghana is moving from the emergency phase of restructuring into the more difficult task of constructing a credible post-default financing framework.
For investors, the central question is whether the discipline imposed during the crisis will survive as financing conditions improve. Dr Forson has sought to address that concern by emphasising stronger fiscal rules designed to constrain future governments and limit renewed accumulation of unsustainable liabilities.
“We are ensuring the fiscal rules we have instituted are enshrined in law, so that no matter which government is in office, these rules will be respected,” he said.
Ghana has experienced repeated cycles in which fiscal consolidation is followed by renewed expenditure pressures, particularly around election periods. A durable decline in debt vulnerability will therefore depend not simply on passing fiscal rules but on enforcing them consistently.
Transparent accounting, stronger parliamentary scrutiny and tighter controls over commitments will matter as much as the wording of the legislation itself. The lower debt-service burden also creates expectations about how the resulting fiscal space should be used.
Redirecting even part of the resources previously absorbed by debt towards transport, healthcare, education, energy and other productive infrastructure could support medium-term growth.
Faster growth expands the tax base, raises government revenue and reduces the debt burden relative to the size of the economy.
Government still faces substantial spending obligations, including compensation, energy-sector liabilities, statutory transfers, infrastructure commitments and payments arising from the restructured debt itself.
Revenue performance will therefore remain critical to determining how much of the apparent fiscal improvement can actually be converted into new development expenditure.
If the fall in debt servicing is used to finance productive investments that raise future growth, the fiscal dividend could become self-reinforcing. If it is used to support recurrent expenditure without corresponding revenue gains, pressure could gradually return.
The government must also guard against interpreting improved debt indicators as permission to restart an aggressive borrowing cycle. Ghana’s eventual return to capital markets will be one of the clearest tests of whether the crisis fundamentally changed the country’s approach to debt.
Debt directed towards economically productive projects can support development, especially where infrastructure constraints hold back private investment. The danger lies in borrowing that finances consumption, poorly selected projects or persistent fiscal deficits.
The fall in debt servicing from above 50.00% of government revenue to below 20.00% is therefore a major milestone, but it is not the conclusion of Ghana’s fiscal repair. The first phase of the crisis was about restructuring liabilities and restoring stability.
That means stronger revenue mobilisation, credible expenditure controls, disciplined investment selection and limits on the rate at which new debt is accumulated.
For markets, the most encouraging signal will not simply be a lower debt-service ratio. It will be evidence that Ghana can preserve that ratio through policy rather than through repeated restructuring.
