Prof Bokpin Urges Shift from Debt-to-GDP to Broader Sustainability Indicators in New Debt Management Report
Economist and Professor of Finance at the University of Ghana Business School, Professor Godfred Bokpin, has called for a rethinking of Ghana’s approach to assessing debt sustainability, advocating for a move away from the traditional focus on the debt-to-GDP ratio towards broader, forward-looking indicators.
The call was made during the launch of a new report titled “Sustainable Debt Management in Ghana” jointly published by the Economic Governance Platform (EGP) and the Open Society Foundations (OSF) on Thursday, July 10, 2025.
According to Prof. Bokpin, relying solely on the debt-to-GDP ratio to gauge the country’s fiscal health presents a narrow and potentially misleading picture of debt sustainability. He argued that additional indicators, such as the present value of debt-to-GDP ratio, debt-to-exports ratio, and debt service-to-revenue ratio, provide a more comprehensive assessment of the country’s liquidity and solvency risks.
“Traditionally, we have relied on debt-to-GDP ratio as a measure of debt sustainability, but that is very narrow,” Prof. Bokpin noted. “There are other forward-looking debt sustainability indicators that we should be using regularly, some of which require stronger analysis and forecasting. Sometimes these indicators give you clearer information about what is happening than just the excessive reliance on debt-to-GDP, which may give you false hope.”
Citing Nigeria as an example, Prof. Bokpin explained that despite maintaining a relatively low debt-to-GDP ratio of 40%, the country still encountered significant debt challenges due to weaknesses in other key sustainability metrics. He also pointed to Ghana’s own experience, where economic rebasing artificially reduced the debt-to-GDP ratio, creating an erroneous perception of borrowing space that ultimately led to unsustainable debt accumulation.
“When we chose to rebase our economy, our debt-to-GDP ratio came down significantly. But that didn’t mean we had the space to borrow. Unfortunately, we borrowed without investing in productive sectors, which limited our cash generation capacity while expanding our debt servicing obligations,” he said.
The Sustainable Debt Management in Ghana report, which offers a comprehensive review of Ghana’s fiscal landscape, outlines 14 key recommendations aimed at ensuring long-term debt sustainability and macroeconomic stability.
Key among the recommendations are:
Strengthening Domestic Revenue Mobilisation to reduce overreliance on external borrowing.
Reinforcing Anti-Corruption and Financial Oversight to plug leakages and improve accountability.
Controlling Public Spending and Boosting Efficiency to ensure value for money.
Reforming the Legal Framework for Fiscal Responsibility to enhance fiscal discipline.
Institutionalising a Credible Debt Sustainability Framework with robust analytical tools and clear thresholds.
Re-establishing and Protecting the Sinking Fund to manage debt repayments proactively.
Curbing Inflationary Financing and Strengthening Central Bank Oversight to preserve macroeconomic stability.
Institutionalising an Independent Fiscal Council to provide impartial fiscal policy advice.
Promoting Transparency in Debt Reporting and Classification for better public scrutiny.
Enhancing Post-Loan Monitoring and Evaluation to ensure borrowed funds are used efficiently.
Strengthening Procurement Governance and Public Financial Management (PFM) Reforms to improve expenditure control.
Promoting Stakeholder Engagement and Fiscal Strategy Transparency to build public trust and consensus.
The report comes at a time when Ghana is navigating a complex economic environment and ongoing fiscal consolidation efforts under an International Monetary Fund (IMF) programme.
Experts believe that implementing these recommendations will not only strengthen Ghana’s debt management framework but also help restore and deepen macroeconomic stability, enhance investor confidence, and place the country on a path of inclusive and sustainable growth.
