- Ghana’s US$15.59 Billion Eurobond Binge Financed Budgets, Not Self-Repaying Projects — Opoku-Afari
Ghana borrowed US$15.59 billion from international capital markets between 2007 and 2021 through nine Eurobond issuances, but the funds were largely used to close budget financing gaps rather than being tied specifically to investments capable of generating the cash flows needed to repay the debt, according to former Bank of Ghana First Deputy Governor Maxwell Opoku-Afari.
The finding forms part of an August 2026 policy note, How Not to Miss a Crisis: Lessons from Ghana, in which Dr Opoku-Afari reconstructs the country’s path from post-HIPC debt relief to the sovereign debt crisis that culminated in the suspension of most external debt payments in December 2022.
The paper argues that Ghana accumulated debt more quickly than it strengthened the productive and revenue-generating capacity required to service it.
“Ghana borrowed US$15.59 billion from the international capital market over the period 2007-2021 (9 issuances) to close budgetary financing gaps,” the report states. It adds that the Eurobond proceeds did not go specifically to “self-repaying projects” but were used for budget financing and were mostly spent on recurrent expenditure.
That distinction goes to the heart of Ghana’s debt problem. Borrowing on international markets is not inherently problematic if the resulting investment expands productive capacity, generates sufficient economic returns or increases the government revenue required to meet future debt service.
The risk becomes much larger when long-term foreign-currency debt is used repeatedly to finance annual expenditure gaps. The liability remains long after the expenditure has been consumed, while government must eventually generate dollars to meet interest and principal payments.
Ghana first entered the international capital market in 2007 after substantial debt relief under the Heavily Indebted Poor Countries initiative and the Multilateral Debt Relief Initiative had expanded fiscal space. The country received about US$3.7 billion in debt cancellation and subsequently gained access to international markets as strong growth and improving economic prospects strengthened investor confidence.
But the policy note argues that the new borrowing capacity was accompanied by persistent fiscal weakness. Fiscal deficits averaged 8.30% between 2010 and 2024, while gross public debt climbed from about 38.90% of GDP in 2010 to 92.70% in 2022, before falling following the domestic and external debt restructurings. Increased Eurobond issuance, particularly after 2013, was among the key turning points identified in the debt build-up.
The problem was compounded by the structure of government expenditure. Between 2018 and 2022, interest payments alone absorbed an average of about 29.00% of total government spending.
Combined with employee compensation, those relatively rigid expenditures consumed almost 60% of the budget, squeezing the resources available for education, healthcare, water and other development investment and helping perpetuate the need to borrow to fill annual financing gaps.
At the same time, Ghana struggled to mobilise sufficient domestic revenue. Tax revenue remained around 13%–15% of GDP, which the paper describes as below peer-country levels and inadequate relative to the country’s development and debt-service requirements.
The combination created a difficult fiscal cycle: limited revenue constrained the budget, recurrent and interest expenditure absorbed a substantial share of available resources, and government borrowed repeatedly to close the resulting financing gap.
Dr Opoku-Afari argues that the quality of investment financed through borrowing was equally important. Although borrowing was frequently presented as supporting infrastructure and flagship programmes, the paper says significant amounts were absorbed by recurrent spending, weakened by cost overruns or produced limited growth returns because of weaknesses in project appraisal, selection and execution.
That helps explain what the paper describes as a disconnect between Ghana’s strong headline growth and its capacity to sustain mounting debt.
Real GDP growth averaged about 6.70% between 2010 and 2019, but the expansion remained heavily dependent on commodities and extractive industries rather than broad-based productivity improvements.
The paper points to a narrow export base centred on gold, cocoa and oil, limited manufacturing and weak productivity in agriculture and services. It describes growth as increasingly “jobs-lite”, with extractive sectors expanding faster than labour-intensive manufacturing and without the structural transformation required to substantially broaden the tax base or strengthen debt-servicing capacity.
The Eurobond story therefore forms only one part of a much broader explanation for the 2022 crisis. The study identifies contingent liabilities and “hidden debt” in the energy, cocoa and financial sectors as additional vulnerabilities that were not always fully visible in headline public debt figures.
It estimates that energy-sector arrears, financial-sector resolution costs and other contingent liabilities added at least 10–15 percentage points of GDP to Ghana’s effective public-sector exposure over the decade preceding the crisis.
Dr Opoku-Afari also challenges the view that shifting from external to domestic borrowing fundamentally solved Ghana’s debt risks. Instead, the strategy transformed those risks: high domestic interest rates increased debt-service costs, crowded out private-sector credit and strengthened the link between the sovereign and domestic financial institutions.
When confidence eventually deteriorated, Ghana faced pressure across several fronts. The government lost access to international capital markets, the cedi depreciated sharply and debt-service pressures escalated. By the time the IMF-supported programme was approved in 2023, the paper estimates public debt had risen from about 63% of GDP in 2019 to about 93% by end-2022.
The analysis is particularly significant because Dr Opoku-Afari served as First Deputy Governor of the Bank of Ghana between 2017 and 2025 and previously worked as an IMF Mission Chief. His paper does not present Ghana’s debt collapse as the product of a single government decision or external shock; rather, it describes vulnerabilities accumulating across more than a decade.
External shocks including COVID-19, the Russia-Ukraine war and tighter global financing conditions accelerated the breakdown, but the report concludes that the underlying causes were predominantly domestic: weak revenue mobilisation, election-linked spending pressures, rising interest costs and repeated borrowing to finance recurrent expenditure.
The paper also raises uncomfortable questions about surveillance. IMF and World Bank debt sustainability assessments had repeatedly identified Ghana as facing elevated debt risks, including a high risk of debt distress as early as 2015, yet continued market access and assumptions around future fiscal consolidation helped sustain assessments that debt remained manageable.
Dr Opoku-Afari argues that rollover and liquidity risks, the interaction between domestic sovereign debt and banks, contingent liabilities and the broader public-sector balance sheet were not sufficiently incorporated into surveillance. Optimistic baseline assumptions also risked understating how rapidly vulnerabilities could materialise.
His central lesson is consequently broader than whether Ghana should have issued Eurobonds. The problem was the mismatch between the quality of borrowing and the economy’s capacity to repay it. International capital-market access gave Ghana significant financing flexibility, but repeatedly using expensive foreign-currency debt to fund budget gaps without generating corresponding productivity and revenue gains increased vulnerability each time another bond was issued.
The policy note recommends more comprehensive public-sector balance-sheet reporting, regular stress testing of domestic debt and stronger formal roles for non-government actors in fiscal oversight.
Its concluding warning is particularly relevant as Ghana seeks to restore market credibility following its debt restructuring: debt crises can develop even while growth remains strong, headline debt ratios appear manageable and international financing remains available.
The warning signs, Dr Opoku-Afari argues, were visible well before 2022. The failure was that they did not trigger sufficient policy action while adjustment remained a choice rather than an unavoidable crisis.
