“The Warnings Were There — We Missed Them”: Ex‑BoG Deputy Gov Says Ghana’s Debt Crisis Was Years in the Making

Ghana’s slide into full‑blown debt distress in 2022 did not come as a surprise to anyone who was paying close attention — at least according to a new policy paper by former First Deputy Governor of the Bank of Ghana, Dr. Maxwell Opoku‑Afari.

The study, published by the Finance for Development Lab (FDL), argues that Ghana’s debt sustainability assessments failed to fully reflect how quickly the economy could tip into crisis, despite years of visible warning signs.

IMF‑World Bank Debt Sustainability Analyses (DSAs) had flagged Ghana as high risk of debt distress as far back as 2015. Yet the assessments continued to classify the debt as “sustainable,” relying on assumptions of continued market access and successful fiscal consolidation.

Dr. Opoku‑Afari says the issue was not the absence of red flags, but the failure to translate those signals into realistic judgments about the probability and speed of a crisis.

And the evidence, he notes, was mounting.

• Public debt‑to‑GDP surged from below 55% in the early 2010s to nearly 93% by 2022.
• External debt service breached its benchmark as early as 2013, climbing above 40% of government revenue by 2022.
• Interest payments consistently consumed more than 20% of revenue.
• International reserves hovered around the bare minimum of three months of import cover.

These trends pointed to deepening liquidity pressures long before the eventual collapse.

A major critique in the paper is the treatment of Ghana under the Low‑Income Country Debt Sustainability Framework (LIC‑DSF). Dr. Opoku‑Afari argues that the framework did not evolve with Ghana’s transition into a frontier market with significant access to commercial financing and a rapidly expanding domestic debt market.

As government borrowing shifted heavily toward the domestic market, banks, pension funds, insurance firms and foreign investors became major holders of government securities — creating new risks that the framework did not adequately capture.

The paper highlights:

• A weighted‑average interest rate of 10.7% on public debt.
• 17.5% of the debt stock maturing within one year.
• Foreign‑currency‑denominated debt averaging 54.5% of total public debt.

This produced a dangerous feedback loop: rising interest payments forced more borrowing, refinancing occurred at higher rates, and cedi depreciation inflated the domestic value of external obligations.

Dr. Opoku‑Afari identifies three key shortcomings in Ghana’s debt‑monitoring architecture:

1. Optimistic baseline projections — built on assumptions of sustained fiscal consolidation, stronger revenue mobilisation and robust growth.
2. Weak integration of domestic‑debt dynamics — including sovereign‑bank linkages and refinancing risks.
3. Adjustment programmes focused on short‑term fiscal fixes — without addressing structural weaknesses that repeatedly generate new fiscal pressures.

These structural weaknesses included energy‑sector inefficiencies, poor SOE governance and persistent tax‑administration gaps.

The result, the paper argues, was a cycle where Ghana periodically restored macro stability but never eliminated the underlying drivers of debt accumulation.

Ghana’s 2023 IMF arrangement was reportedly the country’s 17th IMF‑supported programme in six decades. For Dr. Opoku‑Afari, this history underscores a deeper policy failure: stabilisation has not consistently translated into durable structural reform.

Fiscal consolidation can improve headline numbers, he notes, but those gains remain fragile if the root causes of fiscal risk are left untouched.

The paper argues that Ghana’s experience carries lessons for other African countries developing domestic capital markets and accessing commercial financing. Traditional assessments that focus heavily on external debt may no longer provide adequate early‑warning signals.

Dr. Opoku‑Afari calls for:

• Greater attention to liquidity and refinancing risks
• Closer monitoring of domestic debt costs
• Stronger analysis of sovereign‑bank linkages
• Better tracking of contingent liabilities
• A fuller view of the public‑sector balance sheet
• Routine stress‑testing and scenario analysis

These tools, he argues, are essential for understanding how public finances respond when interest rates rise, currencies weaken or investors refuse to roll over maturing debt.