Market News

Ghana’s debt burden will ease sharply this year as the economy expands and the government reins in spending after a debt crisis, Barclays Plc said.

The country’s debt ratio probably declined to 54% of gross domestic product in January from 61.8% of GDP at the end of December, three years earlier than an International Monetary Fund goal under the country’s $3 billion programme, Barclays analysts Michael Kafe and Andreas Kolbe wrote in a note to clients. That’s on the back of reduced government borrowing and a larger GDP, the analysts said.

The central bank will publish its next report containing the latest debt figures in two weeks.

Ghana sought IMF help after loans ballooned, and it defaulted in 2022. The new administration under President John Mahama has vowed to cut spending to restore economic stability. Mahama, who resoundingly won the December elections, plans to cut the overall budget deficit to 3.1% of GDP this year from 7.9% in 2024.

These targets are taming public debt, which probably increased 3.9% month-on-month to 755 billion cedis ($57.4 billion) in January, after roughly 10 billion cedis domestic borrowing and 4% depreciation in the cedi against the dollar, Kafe and Kolbe said. Nominal GDP is also estimated to be larger at 1.4 trillion cedis in 2025 compared with about 1.2 trillion cedis last year, they said.

Debt may rise during the year as the government rolls out its programmes, the Barclays analysts said.

Under the current arrangement with the IMF, Ghana must implement reforms in order to reduce its debt burden to 55% of GDP by 2028.