Public debt dropping to 60% of GDP by 2025, 2026

By Praisebell Rosemond Larbi

Fitch Ratings projects that Ghana’s public debt will fall to 60 percent of Gross Domestic Product (GDP) by 2025 and 2026, driven by strong nominal GDP growth, ongoing fiscal consolidation, continued debt restructuring, and a larger-than-expected exchange rate appreciation in recent months.

This represents a significant improvement from 72 percent in 2024 and a peak of 93 percent in 2022, when Ghana announced its intention to default.

The UK-based rating agency made these projections after upgrading Ghana’s Long-term Foreign Currency Issuer Default Rating (IDR) from ‘Restricted Default’ (RD) to ‘B-’ with a Stable Outlook.

Fitch also expects interest payments as a percentage of revenue to remain broadly stable at 26 percent in 2025 and 2026, up slightly from 25 percent in 2024 but down significantly from a peak of 48 percent in 2021. This is due to a declining debt stock, the resumption of payments on external commercial obligations, and a step-up in coupon payments under the Domestic Debt Exchange Program (DDEP), which are expected to increase their average from 5.4 percent in 2024 to 9.1 percent in 2025.

However, the ratio remains above the ‘B’ and ‘C/D’ medians of 13 percent and 16 percent, reflecting ongoing vulnerabilities related to the country’s financial obligations.

Current account surpluses are projected to narrow from a record high of 4.3 percent of GDP in 2024 to 1.1 percent in 2026, due to increased imports and expected declines in key export prices reversing previous large deficits. Despite this, the surplus remains more favorable than the ‘B’ median deficit of 3 percent of GDP in 2026.

Fitch added that Ghana is expected to build international reserves sufficient for 3.9 months of external payments by 2026, up from 2.6 months in 2024 and 1.6 months in 2022, although still below the ‘B’ median of 4.9 months in 2024.