Ghana's interest payments will average a high 20% of government revenue over the next four years, ratings agency S&P Global Ratings has disclosed. This is well below the historical average cost of servicing Ghana's government debt, which peaked at almost 48% in 2021. The reduction is underpinned by the effects of debt restructuring, the cedi's exchange rate appreciation in 2025, and lower local currency financing costs.
According to S&P Global Ratings, the cost of rolling over Ghana's local currency debt has substantially reduced. Interest rates on Ghana's six-month treasury bills have fallen to about 6.5%, and its one-year bills to 10.1%, from almost 30% at year-end 2024. This significant decline in interest rates is attributed to the decrease in inflation and local interest rates, which fell to multi-year lows.
The Ghanaian cedi had previously dropped to GH¢16.47 to US$1 in November 2024 but has since strengthened by 43% from its lowest point. Although the exchange rate has weakened by 9.2% since the start of 2026, it remains relatively stable. Inflation receded to 3.2% in March 2026, which is closest to the lowest rate on record for Ghana, and has since risen modestly to 5% at the end of August 2026.
The Ministry of Finance imposed a three-year ban on the issuance of new medium- or long-term domestic bonds following the domestic debt restructuring in December 2022. However, in 2026, the government started to issue longer tenor bonds, which should help lengthen the maturity profile of Ghana's local currency debt. This move is expected to have a positive impact on the country's debt management.
Despite these positive developments, S&P Global Ratings warns that the conflict in the Middle East is likely to erode some of these gains by causing inflation and financing costs to rise and increasing pressure on the cedi. This potential risk could undermine Ghana's progress in reducing its interest payments and debt servicing costs.
Dr. Cassiel Ato Forson, Minister for Finance, has not publicly commented on the report. However, the Ministry of Finance has been working to implement measures to reduce the country's debt burden and improve its fiscal management. The government's efforts to restructure its debt and improve its revenue mobilization have been recognized by rating agencies and investors.
The S&P Global Ratings report highlights the challenges facing Ghana's economy, including high debt servicing costs and weak institutional arrangements. The report also notes that the country's rating is constrained by its high debt burden and limited fiscal space. Ghana's ability to manage its debt and improve its fiscal management will be crucial in determining its economic prospects in the coming years.
Key points
- Ghana's interest payments are expected to average 20% of government revenue over the next four years.
- The reduction in interest payments is underpinned by debt restructuring, exchange rate appreciation, and lower local currency financing costs.
- The conflict in the Middle East poses a risk to Ghana's economic progress, potentially leading to higher inflation and financing costs.
