Debt servicing cost for the next 4 years pegged at GH₵280 billion

Over the next four years, Ghana’s debt servicing is projected to cost a total of GH₵280 billion, comprising GH₵150 billion for domestic debt servicing and GH₵30 billion for external debt servicing.
Ghana’s public debt stock has reached a historic high of GH₵721 billion as of the end of 2024.
This alarming figure underscores the growing financial burden facing the country.
The country faces an additional cost burden of GH₵15 billion due to cost overruns on 55 stalled infrastructure projects.
These projects remain unfinished primarily due to debt defaults and subsequent restructuring, which has left a staggering $2.95 billion in undisbursed funds.
President John Mahama made this revelation while delivering his first State of the Nation Address (SONA) in his second term in office.

SOEs drowning in debt
Adding to Ghana’s debt woes, several State-Owned Enterprises (SOEs) are grappling with massive financial liabilities.

GH₵68bn ECG debt
The Electricity Company of Ghana (ECG) currently owes GH₵68 billion despite the government collecting over GH₵45 billion through the Energy Sector Levies (ESLA) in the past eight years.

GH₵70bn energy sector debt
Yet, by December 2024, the energy sector was burdened with an overwhelming GH₵70 billion debt.

Energy sector faces GH₵34bn shortfall
The energy sector remains in dire straits, struggling with financing shortfalls due to collection and system losses, non-compliance with the Cash Waterfall Mechanism, and legacy debts. The President revealed that the financing gap has surged to approximately $2.2 billion (GH₵34 billion) for 2025.
Urgent interventions are required to bring this shortfall to sustainable levels and eventually eliminate it.

GH₵32.5bn COCOBOD debt
Ghana Cocoa Board (COCOBOD), once the backbone of the nation’s agricultural sector, is also reeling under financial pressure.
Its balance sheet reveals a debt of GH₵32.5 billion, with GH₵9.7 billion due for payment by the end of September 2025.
President Mahama further highlighted COCOBOD’s operational setbacks, including its inability to supply 333,767 tonnes of cocoa in the 2023/2024 crop season.
These contracts, sold at $2,600 per tonne, have now been rolled over to the 2024/2025 season, resulting in a revenue loss of $4,000 per tonne for every delivery made under these previous agreements.

GH₵21.7bn cocoa road debt
Additionally, cocoa road commitments alone amount to GH₵21.7 billion, of which only GH₵4.4 billion is included in COCOBOD’s total debt.
The President blamed the surge in debts on the previous administration’s decision in 2019 and 2020 to award road contracts exceeding $1 billion, primarily for electoral gains.

Financial sector still struggling

Despite the previous administration’s allocation of GH₵29.9 billion for a financial sector clean-up exercise, Ghana’s financial sector remains unstable.
The sector continues to grapple with liquidity challenges, making it difficult for banks and financial institutions to recover from the economic downturn.
President Mahama noted that the previous government failed to leave behind adequate reserves for debt servicing.
He contrasted this with the 2017 transition, during which his administration had allocated $250 million to the Sinking Fund to facilitate debt servicing.
However, the latest statement of accounts for the Debt Service Reserve Account, also known as the Sinking Fund, shows a meager balance of just $64,000 in the dollar account and GH₵143 million in the Ghana cedi account.

Path to recovery
Despite the dire economic landscape, President Mahama pledged his administration’s commitment to resetting the economy and restoring fiscal discipline.
He assured Ghanaians that the government is implementing corrective measures through the budget to ensure debt sustainability.
He also disclosed that the administration is actively working towards completing the fourth review of the IMF-supported programme, a crucial step in stabilizing the economy.
“We are doubling our efforts to complete all outstanding structural reforms. We will take every necessary step to get things back on track and build the Ghana we want,” the President stated.
With the economic challenges ahead, the government faces a daunting task of balancing debt servicing, financing stalled projects, and reviving state-owned enterprises.
The coming months will determine the effectiveness of its strategies to navigate Ghana out of this financial crisis.