Finance Minister Warns of Rising Borrowing Costs for Africa
Finance Minister Dr. Cassiel Ato Forson has raised concerns over the elevated risk premiums placed on African debt, warning that the trend is driving up borrowing costs and worsening debt vulnerabilities across the continent.
Speaking in Accra after receiving a petition from the African Regional Organization of the International Trade Union Confederation (ITUC–Africa) and the Trade Union Congress (TUC) Ghana, which are advocating for total debt cancellation for Africa, Dr. Forson said African economies continue to pay disproportionately high rates compared to their global peers.
“African countries are borrowing too expensively. Why should the risk premium for African countries be so different from Europe, America, and other parts of the world?” he questioned.
Africa’s total debt has now surpassed $1 trillion, with more than 20 sovereign states classified as being in debt distress by the end of 2024.
Dr. Forson explained that high borrowing costs remain a major driver of the continent’s rising debt-to-GDP ratios.
He noted that although African countries often carry relatively smaller debt volumes, the servicing costs are significantly higher because of expensive loan terms.
“The time has come for us to also pay attention to what constitutes debt service as a percentage of revenue. Because we borrow so expensively, debt servicing becomes unbearable,” he said.
Dr. Forson called for stronger accountability in debt management, stressing that prudent use of borrowed funds is essential to sustainable development.
“We can’t forever be asking for debt forgiveness if, when we get this debt, we misuse it,” he cautioned. “It is important that governments are transparent and accountable in the use of public debt, and that trade unions continue to put pressure on them in this regard.”
