BY ISSAH OLEGOR
Ghana’s debt servicing burden is expected to remain significant over the next four years, with interest payments projected to average about 20% of government revenue, according to ratings agency S&P Global Ratings.
Although the projected figure remains substantial, it represents a marked improvement from the levels recorded during Ghana’s recent debt crisis. The cost of servicing government debt peaked at almost 48% of government revenue in 2021, highlighting the extent of the adjustment following the country’s debt restructuring.
S&P attributed the projected reduction in interest costs to several factors, including the impact of Ghana’s debt restructuring, the appreciation of the cedi in 2025 and lower domestic financing costs as inflation and local interest rates declined.
The ratings agency noted that the cedi has weakened by 9.2% since the beginning of 2026, but remains significantly stronger than its lowest point.
According to S&P, the currency is still about 43% stronger than it was at its weakest level.
The cedi reached approximately GH¢16.47 to US$1 in November 2024, during a period of heightened pressure on Ghana’s foreign exchange market and public finances.
The subsequent strengthening of the currency has provided some relief to the government’s debt position, particularly because movements in the exchange rate can influence the domestic-currency value of Ghana’s foreign-currency debt.
S&P also pointed to the decline in inflation as a major factor behind lower financing costs.
Inflation fell to 3.2% in March 2026, a level described as close to Ghana’s historical low, before increasing modestly to 5% by the end of August 2026.
That represents a substantial decline from the period between 2022 and 2024, when inflation averaged about 31% annually.
According to S&P, part of the inflationary pressure during that period was linked to the Bank of Ghana’s direct financing of government ahead of and during the country’s debt crisis.
The subsequent decline in inflation has allowed domestic interest rates and the cost of government borrowing in the local market to fall significantly.
S&P said the cost of refinancing Ghana’s domestic-currency debt has also reduced considerably.
Interest rates on Ghana’s six-month Treasury bills have fallen to around 6.5%, while one-year Treasury bills are now around 10.1%.
These rates compare with levels approaching 30% at the end of 2024, when domestic borrowing costs were considerably higher.
The reduction in Treasury bill yields has helped lower the immediate cost of rolling over government debt and contributed to the broader decline in the government’s interest burden.
Following the domestic debt restructuring in December 2022, the Ministry of Finance imposed a three-year suspension on the issuance of new medium- and long-term domestic bonds.
The government subsequently resumed issuing longer-tenor domestic bonds in 2026.
S&P said the return to longer-term borrowing instruments could help extend the maturity profile of Ghana’s local-currency debt.
A longer maturity profile can reduce the frequency with which government needs to refinance existing obligations, potentially reducing exposure to sudden changes in domestic interest rates.
Despite the improvement in debt-servicing conditions, S&P warned that external developments could undermine some of the gains.
The ratings agency identified the ongoing conflict in the Middle East as a potential source of renewed economic pressure.
According to S&P, the conflict could contribute to higher inflation and financing costs while putting additional pressure on the cedi.
