Debt-to-GDP Drops Sharply to 43.8%, But Will the Anchor Hold? What It Means for the Economy & Ghanaians

For the first time in Ghana’s recent economic history, there is genuine reason to breathe a little easier, as there has been a significant improvement in the country’s public debt stock.

 The 2025 Mid-Year Budget Review, presented by Finance Minister Dr. Cassiel Ato Forson, revealed a significant decline in Ghana’s public debt, a trend the government attributes to improved fiscal discipline, tighter debt controls, and a stabilising cedi.

Ghana’s public debt dropped from GH¢726.7 billion at the end of December 2024 to GH¢613 billion by June 2025. This means an amount of GH¢113.7 billion has been shaved off in just six months. This also translates into an unprecedented 15.6% negative debt accumulation rate.

The mid-year budget review further indicates that in terms of debt-to-GDP, the rate that was inherited at 61.8% as of the end of 2024 has significantly dropped to 43.8% as of the end of June 2025.

In terms of distribution, Ghana’s foreign debt, as a percentage of total public debt, declined from 57.4% as of end December 2024 to 49% by end-June 2025.

However, behind the impressive statistics lies a deeper question: what does this mean for ordinary Ghanaians and their businesses? And is this progress sustainable?

Relief for the Economy, How Deep?

This development brings a number of goodies for the economy.  Such a favourable debt profile is a boost to investor confidence and also helps to stabilize the economy. It also frees up more funds for essential development projects like roads, schools, and hospitals instead of just paying interest on loans.

A healthier debt profile can help strengthen the cedi, reduce inflation pressures, and support long-term economic growth.

For businesses that have been bemoaning the high lending rate, a lower public debt can lead to lower interest rates, making it cheaper for businesses to borrow and expand.

Moreover, for the average person, lower public debt can mean reduced cost of living in the long run. It also reduces the pressure on the government to increase taxes, which means more money in people’s pockets. Better debt management may also allow the government to improve public services like healthcare and education.

Will It Last?

Experts warn that while the current debt trajectory is promising, it’s not yet time to celebrate. These analysts are cautiously optimistic. The drop in debt is largely due to the effects of debt restructuring and the cedi’s stabilization.

It is important to note that the same mid-year review that announced the good news, is the same budget that revealed the massive infrastructure projects, especially in the area of roads that also need financing.

This means the government is yet to accelerate on infrastructure projects, and hence funding will be very key. With meagre tax revenue, there is a tendency that the government will borrow more to fund these projects.

The question that many are asking is, will the government be able to hold the anchor without spiralling into unsustainable debt levels?  

What’s Next?

If managed prudently, this public debt reduction offers Ghana a unique opportunity to reprioritise development, starting with road infrastructure. Well-paved, accessible roads are not just concrete; they’re enablers of job creation, faster movement of goods, improved access to schools and hospitals, and lower transport costs.

As Finance Minister Ato Forson rightly pointed out, this improvement has significantly improved Ghana’s debt sustainability. However, the real task lies in how the government is able to sustain it, and more importantly, how the gains can be leveraged to the advantage of businesses and the ordinary Ghanaian.

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