Ghana now spends less than 20% on servicing debt - Dr Ato Forson

The Minister of Finance, Dr Cassiel Ato Forson, says the country now spends less than 20 per cent of its revenue on debt servicing, down from about 50 per cent in the past. He said the previous debt-service burden, estimated at 85 per cent of Gross Domestic Product (GDP), left the country with fewer resources for schools, hospitals, roads and other critical infrastructure.

The Finance Minister made the remarks at the signing of an agreement between the governments of Ghana and Belgium to restructure debt owed to Belgium’s export credit agency. “At its peak, we were spending about 50 per cent of our revenue on debt servicing. This meant less money for schools, hospitals, roads and other infrastructure. That was unsustainable,” Dr Forson said.

“Today, I am proud to say that we have made considerable progress. We are now spending less than 20 per cent of our revenue on servicing debt.” He explained that the reduction had created more fiscal space for the government to invest in public infrastructure and social services that directly improved the lives of Ghanaians.

Dr Forson said the government was also putting measures in place to prevent Ghana from returning to an unsustainable debt situation. “We are ensuring the fiscal rules we have instituted are enshrined in law, so that no matter which government is in office, these rules will be respected,” he stated.

The Belgian Ambassador to Ghana, Carole van Eyll, was delighted about the signing of the agreement and thanked Ghana for its cooperation. She stated that Ghana had made tremendous progress and that the gesture would convince many Belgian companies and businesses to come to Ghana.

The government has so far signed Bilateral Debt Restructuring Agreement with almost 10 countries under the country’s official creditor framework. The agreements include those with Spain, China Exim Bank, France, Finland, the United Kingdom and Germany. Having completed the restructuring of domestic debt, which achieved about 85 per cent outturn, the government turned to external creditors, including both bilateral and commercial creditors.

On December 19, 2022, the government announced the suspension of external commercial obligations to enable it to renegotiate its domestic, external and bilateral debts. Following the formation of the Creditor Committee of the Paris Club, backed by China, the government began debt restructuring negotiations with its bilateral creditors in a bid to restructure debts of about $5.4 billion.