S&P Global Ratings has projected that Ghana's interest payments will average 20% of government revenue over the next four years. This represents a significant burden on the public purse, although it is a sharp drop from the 48% peak recorded in 2021. The agency attributes the easing burden to three main factors: the effects of Ghana's debt restructuring, the cedi's appreciation through 2025, and lower local currency financing costs.
The Ghanaian government's interest payments have been impacted by the country's debt restructuring programme, which was implemented in December 2022. As part of the programme, the Ministry of Finance imposed a three-year ban on issuing new medium- or long-term domestic bonds. However, in 2026, the government resumed issuing longer-tenor bonds, which S&P said should help stretch out the maturity profile of Ghana's local currency debt.
The cedi has experienced significant fluctuations in recent years, weakening by 9.2% since the start of 2026. Despite this, it remains 43% stronger than its historic low of GH₵16.47 to the US dollar, hit in November 2024. Inflation, meanwhile, fell to 3.2% in March 2026, near a record low for Ghana, before climbing back to 5% by the end of August 2026.
S&P noted that interest rates on Ghana's six-month treasury bills have dropped to about 6.5%, and one-year bills to 10.1%, down from close to 30% at the end of 2024. This decrease in interest rates has contributed to the easing burden of interest payments on the government's revenue.
The implications of Ghana's high interest payments are significant, as every cedi diverted to interest payments is a cedi unavailable for public services such as education, healthcare, and infrastructure. A 20% average interest-to-revenue ratio still represents a substantial claim on the national budget, limiting the government's fiscal space for development spending over the next four years.
S&P has cautioned that the conflict in the Middle East could erode some of the gains made by Ghana, pushing up inflation and financing costs and adding pressure on the cedi. This warning comes days after the agency's separate assessment that Ghana's gold and reserve accumulation drive under GANRAP could cost the country up to 2.6% of GDP annually.
The agency is keeping a close watch on Ghana's fiscal trajectory, even after it recently revised the country's outlook. The sources do not specify a date for S&P's next review of Ghana's credit metrics, nor do they detail how the government plans to manage the projected interest burden beyond continuing to issue longer-tenor bonds.
Key points
- Ghana's interest payments to average 20% of government revenue over the next four years.
- The easing burden of interest payments attributed to debt restructuring, cedi appreciation, and lower financing costs.
- High interest payments limit government's fiscal space for development spending.
