African Countries Advance Sovereign Debt Reforms with Support from AfDB

African countries are making notable progress in sovereign debt management as part of broader efforts to achieve inclusive growth and structural transformation.

Key reforms ranging from Ghana’s fiscal tightening measures to Zambia’s new debt legislation and The Gambia’s improved debt transparency were spotlighted during a capacity development event held in Accra, Ghana, by the African Development Institute through its Public Finance Management Academy for Africa (PFMA).

The week-long training aimed to strengthen sovereign debt management and loan negotiation capacity among Africa’s transition countries economies classified as fragile and facing high or moderate risk of debt distress. These states contend with overlapping political, economic, environmental, and security challenges, and remain central to the continent’s stability and resilience agenda.

Under the theme “Strengthening Capacity for Loan Negotiation and Debt Restructuring in Africa’s Transition States,” the event marked the second edition of the PFMA’s Spotlight on Public Debt Management in Transition States. The inaugural edition took place in Addis Ababa, Ethiopia, in June 2024.

In his opening remarks, Ghana’s Deputy Minister for Finance and Economic Planning, Thomas Nyarko Ampem, outlined the country’s recent economic gains following its debt restructuring efforts. Though Ghana is not a Transition State, it has emerged as a reference point for fiscal reform and policy discipline on the continent.

According to Ampem, Ghana has experienced “one of the fastest credit rating upgrades post-debt restructuring in recent global developments. What this means is that one cardinal objective of the IMF programme, which was the restoration of international market access, has been achieved far ahead of time.”

Ghana’s economy grew by 5.3% in the first quarter of 2025, surpassing the annual target of 4.0%. Consumer and business confidence indicators have reached seven-year highs, inflation has declined to its lowest point since 2022, and the Ghanaian cedi has recently been ranked the best-performing currency globally. New legislation has introduced stricter controls on borrowing, including legal penalties for extrabudgetary spending and a requirement for ministerial approval of all government loans.

Zambia, another non-Transition country that has pursued debt restructuring under the G20 Common Framework, has strengthened oversight by establishing a Debt Management Department through new legislation. The move is intended to improve public debt tracking and support ongoing restructuring efforts alongside Ghana, Chad, and Ethiopia.

Several Transition States shared promising reforms. In Sierra Leone, inflation has fallen sharply from 52% in late 2023 to 7.5% by April 2025, thanks to enhanced debt transparency and political commitment to arrears clearance. The Gambia, meanwhile, has reduced its debt-to-GDP ratio from over 120% in 2017 to 74% by the end of 2024, driven by regular debt sustainability assessments and prudent fiscal management.

“We have a lot of good lessons within Africa that we can learn from, African countries have solutions for most of the problems facing them, but we need to look inward enough,” said Dr. Eric Ogunleye, Director of the African Development Institute. “At the African Development Bank, our focus is to make debt work better for Africa.”

Among the key proposals at the Accra gathering was the creation of an “Accra Club”, a borrower coordination platform modeled on the Paris and London Clubs. Such a platform would help African sovereign borrowers present unified positions in debt negotiations, enhancing their collective bargaining power.

The training also emphasized the need for countries to develop early warning systems to better anticipate and manage debt distress, ensuring timely interventions and policy responses.

The African Development Bank, through the African Development Institute, continues to support these reform efforts across the continent. Its key initiatives include the Public Finance Management Academy for Africa, the Africa Debt Managers Initiative Network (ADMIN), the Debt Management Forum for Africa (DeMFA), and the PFMA Spotlight series, all designed to enhance institutional capacity and foster sustainable public financial management.

“The African Development Bank is your bank,” said Ogunleye in closing remarks. “We stand ready to work with all partners everywhere, not just in proffering solutions, but also in implementing them for sustainable impact and outcomes.”

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