Ghana now spending less than 20 per cent of revenue on servicing debt — Ato Forson

Ghana’s debt-servicing burden has fallen significantly, with the country now spending less than 20 per cent of its revenue on servicing debt compared with about 50 per cent previously, Finance Minister Dr Cassiel Ato Forson has disclosed.

According to Dr Forson, the high debt-service burden in the past severely constrained government’s ability to finance essential sectors, leaving limited resources for infrastructure and social services.

He made the disclosure during the signing of a debt restructuring agreement between Ghana and Belgium covering obligations owed to Belgium’s export credit agency.

“At its peak, we were spending about 50 per cent of our revenue on debt servicing. This meant less money for schools, hospitals, roads and other infrastructure. That was unsustainable,” Dr Forson said.

He said the country had since made significant progress in reducing the pressure of debt servicing on government finances.

“Today, I am proud to say that we have made considerable progress. We are now spending less than 20 per cent of our revenue on servicing debt,” he added.

More Fiscal Space
The Finance Minister said the reduction in debt-servicing costs had created additional fiscal space for government to invest in infrastructure and social services.

He stressed, however, that measures were being implemented to ensure Ghana does not return to an unsustainable debt position.

“We are ensuring the fiscal rules we have instituted are enshrined in law, so that no matter which government is in office, these rules will be respected,” he said.

Belgian Ambassador Welcomes Agreement
Belgian Ambassador to Ghana, Carole van Eyll, welcomed the debt restructuring agreement and expressed appreciation to the Ghanaian government for its cooperation throughout the process.

She said Ghana had made significant progress in addressing its debt challenges and expressed confidence that the agreement would strengthen investor confidence and encourage more Belgian businesses to explore opportunities in the country.

Ghana’s Debt Restructuring Programme

The latest agreement forms part of Ghana’s broader external debt restructuring programme, under which the government has reached bilateral agreements with nearly 10 creditor countries.

The countries and institutions involved include Spain, China Exim Bank, France, Finland, the United Kingdom and Germany.

After completing the domestic debt restructuring programme, which recorded an estimated 85 per cent participation rate, government shifted its focus to restructuring external obligations owed to bilateral and commercial creditors.

Ghana announced a suspension of payments on certain external commercial obligations on December 19, 2022, as part of efforts to create room for comprehensive debt restructuring.

Following the establishment of a Creditor Committee under the Paris Club framework, with China also participating, the government began negotiations with bilateral creditors to restructure approximately US$5.4 billion in debt.