Accra: Ghana's debt-service burden has significantly decreased, now accounting for less than 20 percent of government revenue, which has freed up public resources for infrastructure and productive investments.
According to Ghana Web, Finance Minister Dr. Cassiel Ato Forson announced that the debt-service ratio has sharply declined from about 55 percent during the country's debt crisis. This improvement follows the restructuring of domestic and external obligations and better fiscal management by the government. For every GHS100 collected in revenue, less than GHS20 is now allocated to debt service, compared to about GHS55 previously.
Dr. Forson emphasized, "We have reduced debt service from about 55 percent of revenue to less than 20 percent. That means we are creating the fiscal space to invest in infrastructure, to invest in our people, and to invest in the productive sectors of the economy."
This reduction marks a significant improvement in Ghana's fiscal stance since the commencement of public debt restructuring after suspending most external obligations in December 2022. Debt service had previously exerted immense pressure on the national budget, consuming a large share of government revenue and limiting capital expenditure and other programs. The recent figures suggest a noticeable easing of that pressure.
The progress has been gradual, with debt service representing 28.8 percent of domestic revenue in 2025 before falling below 20 percent currently, as reported during the 2026 Mid-Year Budget Review. However, the reduction does not immediately free up funds for discretionary spending as the government still faces substantial commitments, including wages and social programs.
In the first half of 2026, the government spent GHS21.7 billion on capital projects against a planned GHS36.6 billion, creating a shortfall of GHS14.9 billion. Despite stronger-than-expected fiscal performance, questions have arisen regarding expenditure restraint and its impact on investment. The lower debt-service requirements might allow for accelerated infrastructure spending in the latter half of the year without exerting undue pressure on the fiscal balance.
The debt restructuring program, which altered the timing and cost of Ghana's obligations, has played a pivotal role in this reduction. The Domestic Debt Exchange Programme restructured securities held by domestic investors, while agreements with external creditors provided debt-service relief through extended maturities and reduced interest payments. Ghana's recent bilateral debt restructuring agreement with Belgium is part of this ongoing process.
Lower debt service could ease the government's domestic financing pressures. Past heavy debt repayments and fiscal deficits led to a reliance on domestic borrowing, contributing to high interest rates and competition with the private sector for funds. A sustained fiscal improvement could alleviate this pressure, contingent on future borrowing needs and budget execution.
While the reduction in debt service is a positive development, it must be managed carefully, as restructuring merely changes repayment terms without eliminating obligations. As grace periods expire, debt-service requirements could rise again. Directing available resources into investments that expand production and the tax base will be crucial for meeting future obligations without excessive borrowing.
Ultimately, moving from 55 percent to below 20 percent of revenue for debt service represents a significant easing of constraints that dominated Ghana's public finances. With less revenue absorbed by debt service, the government can finance infrastructure and capital projects, fostering increased investment and private-sector activity across the economy.