- Ghana Pushes External Debt Restructuring Forward with €163 Million Belgium Agreement
Ghana has secured a restructuring agreement covering €163 million owed to Belgium’s export credit agency, marking another step towards completing the sovereign debt overhaul triggered by the country’s 2022 default and creating additional breathing room for a government seeking to rebuild fiscal credibility.
The agreement provides debt-service relief and extends repayment terms, reducing near-term pressure on the budget as Accra attempts to consolidate its macroeconomic recovery and restore confidence among bilateral creditors, investors and international markets.
Finance Minister Dr Cassiel Ato Forson said the agreement brings Ghana closer to completing its wider external debt restructuring and should allow government to redirect resources from debt servicing towards social services and productive expenditure.
“With this agreement, Ghana moves closer to completing the debt restructuring, restoring confidence and securing a more stable economic future for our people,” Dr Forson said.
The significance of the deal extends beyond the €163 million involved. Belgium becomes the eighth member of Ghana’s Official Creditor Committee with which the government has concluded a bilateral restructuring agreement, steadily reducing uncertainty surrounding the country’s post-default debt profile.
Ghana suspended payments on much of its external public debt in December 2022 after rising borrowing costs, severe cedi depreciation, accelerating inflation and mounting debt-service obligations overwhelmed the government’s finances.
The subsequent restructuring has covered domestic bondholders, bilateral lenders and international bondholders and has been accompanied by an IMF-supported programme designed to restore debt sustainability, rebuild reserves and re-establish macroeconomic stability.
The Belgium agreement therefore represents another piece of a much larger fiscal repair exercise rather than a standalone debt settlement.
Debt restructuring does not normally remove the entire underlying obligation. Instead, it changes the timing, interest cost or other terms of repayment, reducing the amount government must find in the near term.
For Ghana, that matters because debt service had previously absorbed a substantial share of public revenue, limiting fiscal space for infrastructure, healthcare, education and other development priorities.
“For every Ghanaian, it means that more of our national resources can be directed towards improving lives rather than servicing unsustainable debt,” Dr Forson said.
He added: “It means less pressure on the national budget. And obviously, the people of Ghana will have an opportunity to experience more healthcare because we are reducing the amount we use to service the debt.”
That argument goes to the heart of the economic case for restructuring.
A government that spends an excessive proportion of its revenue servicing debt has less flexibility to invest, respond to shocks or support economic activity. Lower near-term debt obligations can therefore materially improve the composition of public spending.
Dr Forson has also indicated that Ghana’s debt-service burden has fallen to below 20.00% of government revenue, compared with roughly 50.00% previously.
If sustained, that shift would represent a substantial improvement in the country’s fiscal position.
But the economic dividend will depend on what government does with the space created.
Debt relief can stabilise public finances, but it cannot by itself resolve the structural weaknesses that contributed to the crisis.
Ghana has repeatedly struggled with narrow domestic revenue mobilisation, rigid expenditure commitments, contingent liabilities and periods of rapid borrowing that were not always matched by equivalent increases in productive capacity.
That means the danger after restructuring is not simply another external shock. It is a return to the fiscal behaviour that allowed vulnerabilities to accumulate in the first place.
Dr Forson said government therefore wants stronger fiscal rules embedded in law to limit the ability of future administrations to recreate unsustainable debt dynamics.
“We largely want to ensure that the fiscal rules that we have instituted today are enshrined in law. So that, even if this government is not there, the next government will have to make sure that these fiscal rules are respected,” he said.
That commitment may ultimately prove more important than any individual bilateral restructuring agreement. For creditors and investors, Ghana’s post-default credibility will depend not only on reducing the present debt burden but demonstrating that public finances can remain disciplined after the immediate pressure of the crisis subsides.
That will require sustained primary balances, stronger revenue mobilisation, tighter control of arrears and contingent liabilities and greater scrutiny of new borrowing.
The quality of expenditure will matter equally. Fiscal space used to finance recurrent consumption without strengthening the economy’s productive base could eventually recreate financing pressure.
Fiscal space directed towards transport, energy, health, education and reforms that improve private-sector productivity has a greater chance of strengthening the revenues required to service debt sustainably in future.
Belgium’s participation also carries a signalling effect. Concluding bilateral agreements with individual members of the Official Creditor Committee provides greater certainty over Ghana’s future repayment profile and demonstrates continued willingness among official lenders to support the country’s adjustment programme.
Belgian Ambassador to Ghana Carole van Eyll has expressed support for the restructuring process.
“We are happy to continue supporting Ghana, and we are pleased that this restructuring has been concluded,” she said.
The remaining task is to complete outstanding bilateral agreements and convert the broader restructuring into a predictable medium-term debt-service schedule.
That would help remove one of the major uncertainties surrounding Ghana’s economic outlook and provide policymakers with greater visibility over future financing requirements.
But restructuring alone will not automatically restore normal international market access. Investors that suffered losses or altered payment terms during Ghana’s debt restructuring will scrutinise the country’s fiscal performance closely before pricing new sovereign risk.
The government will therefore have to demonstrate that the current improvement is institutional rather than cyclical.
The €163 million Belgium agreement is consequently important less because of the size of one creditor claim than because of where it sits in Ghana’s broader recovery.
The country is progressively replacing an unsustainable repayment schedule with one it believes can coexist with economic growth and essential public spending.
What it does with that time will determine whether the restructuring becomes a genuine reset or merely postpones another debt problem.
Ghana has secured breathing room from its creditors. The harder task now is to ensure that fiscal discipline, stronger institutions and productive investment prevent the country from having to negotiate that breathing room again.
