Debt Misreporting, Weak Oversight Push Ghana Toward Fiscal Cliff — EGP Warns

A new report by the Economic Governance Platform (EGP) has issued a stark warning on Ghana’s worsening debt crisis, urging government to adopt urgent, far-reaching reforms to restore fiscal stability and prevent another cycle of economic collapse.

Launching the study in Accra during a High Level Policy Dialogue on Economic Governance, Abdulkarim Mohammed, Coordinator of the EGP, said Ghana’s chronic debt distress, now at the heart of all 17 IMF bailouts in the country’s history, demonstrates deep structural failures in public financial management, transparency, and accountability.

The report, funded by Open Society Foundation Africa, draws on three complementary research papers focusing on Debt Accumulation and Sustainability, Debt Management Frameworks, and Debt Transparency and Accountability. Together, they present one of the most comprehensive analyses of Ghana’s debt landscape in recent years.

Debt Reporting “Distorted,” Fiscal Discipline Weak — Report

According to the findings, Ghana’s official debt-to-GDP ratio which is previously reported at 75.9% jumped to 105% after an IMF review, exposing major inconsistencies in how government reports its liabilities.

The report cites the exclusion of contingent liabilities such as energy sector arrears and financial sector clean-up costs as a source of dangerous misreporting.

Ghana’s repeated downgrades by Moody’s, Fitch, and S&P between 2021 and 2022, coupled with the IMF declaring the country in debt distress, eventually cut Ghana off from international capital markets and triggered its 18th IMF programme.

The EGP report highlights additional weaknesses including:
• Procyclical fiscal policy tied to election-year spending
• Ballooning rigid expenditures such as wages and interest payments
• Sole-sourcing of contracts, with almost 86% of high-value contracts bypassing competitive tendering
• Weak parliamentary oversight over borrowing decisions
• Inflationary deficit financing by the Bank of Ghana

“These patterns show a systemic lack of discipline and a governance problem that can no longer be ignored,” the report states.

The study also criticizes Ghana’s procurement regime, noting that excessive sole-sourcing, inflated project costs, and frequent politically motivated contract terminations have worsened the debt situation.
Such weaknesses, it argues, have not only increased the cost of public projects but created new financial liabilities that the state must absorb—adding to the debt stock.

Key Recommendations: Fiscal Council, Transparency, and Spending Control

However, the EGP outlines 14 major reforms it says are essential for reversing Ghana’s debt distress, including including:

1. Broaden the tax base and strengthen revenue mobilization, especially in property taxes, extractives, and illicit financial flows.
2. Empower anti-corruption institutions such as the OSP and EOCO to curb financial leakages.
3. Mandate strict fiscal discipline, including limits on government borrowing and spending.
4. Amend the Fiscal Responsibility Act to enforce penalties for overspending.
5. Improve budget execution through full rollout of GIFMIS and GHANEPS.
6. Restore the Sinking Fund to ensure Ghana can repay future bonds.
7. Enforce transparency in debt reporting, including all off-budget debts.
8. Establish an independent Fiscal Council to monitor borrowing and expenditure.
9. Strengthen parliamentary oversight in approving loans and guarantees.
10. End inflationary financing by capping Bank of Ghana lending to government.

The report also calls for a shift from relying solely on debt-to-GDP indicators to broader, forward-looking risk assessments such as those used by the IMF and World Bank.

Abdulkarim Mohammed described the report as a “vital resource” for policymakers, civil society, and international partners committed to promoting responsible debt governance.

“The urgency for reform cannot be overstated,” he said. “Ghana cannot continue repeating the cycle of borrowing, crisis, bailout, and relapse. We need stronger institutions, transparent reporting, and disciplined fiscal management.”

He expressed gratitude to Open Society Africa and acknowledged the research teams whose work he said would “contribute meaningfully to building a future of enhanced debt sustainability and economic resilience for Ghana.”

The EGP reaffirmed that sustainable debt management is central to Ghana’s long-term development and urged government to act swiftly to restore confidence in the country’s economic governance.
Ghana’s Mounting Debt Risks Exposed as Weak Procurement, Overspending Deepen Fiscal Strain

Ghana’s economy, still nursing the bruises of the past three turbulent years, is once again under intense scrutiny as new analysis exposes deep structural weaknesses driving the country’s recurrent debt crises.

A sweeping review of Ghana’s public finance architecture reveals that chronic revenue shortfalls, ballooning expenditure, weak procurement systems, and politically driven borrowing continue to fuel an unsustainable cycle of debt accumulation.

The economic storm that began in 2022—with inflation peaking at a 20-year high, the cedi sliding sharply, and foreign reserves thinning—culminated in Ghana’s historic default on its external obligations in December that year.

The government’s subsequent return to the International Monetary Fund (IMF) in May 2023 marked yet another attempt to steady the ship, securing a US$3 billion Extended Credit Facility aimed at restoring macroeconomic stability, restructuring debt, and rebuilding confidence.

So far, Ghana has received US$1.92 billion of the IMF package after meeting key programme benchmarks, with another US$360 million expected in May 2025. Early signs of recovery are beginning to show: GDP expanded by 4.8% in the first quarter of 2024, rising to 7.2% in the third quarter, buoyed by mining, construction, agriculture and ICT. Inflation has also fallen from 39% in 2023 to an average of 24% in 2024—still far from ideal, but moving gradually toward the central bank’s target band.

Yet behind these green shoots lies a troubling fiscal reality that threatens long-term stability.

For more than a decade, Ghana has struggled to raise adequate revenue to match its rising spending needs. Even after the onset of oil production in 2010, total revenue has rarely exceeded 20% of GDP. Meanwhile, expenditures have ballooned—peaking at over 30% of GDP in 2016—driven largely by compensation for public sector workers, grants to government units, subsidies, and interest payments.

In 2024 alone, total programmed expenditure hit GH¢226.7 billion, or 21.6% of GDP. Compensation, grants and interest payments now absorb almost all non-oil tax revenue, leaving little space for development projects. The overall fiscal deficit stands at GH¢61.9 billion (5.9% of GDP), with the gap routinely plugged through borrowing.

By the end of 2022, Ghana’s public debt had soared to 92.2% of GDP—about US$66.5 billion—split between 50% domestic and 43% external obligations. Although recent domestic and external debt restructurings are projected to lower the burden to 55% of GDP by 2028, analysts warn that without drastic reforms, the gains will be short-lived.

Procurement Failures Fuel Cost Overruns

Perhaps the most striking revelation from the study is the magnitude of procurement failures across Ministries, Departments and Agencies. In the last decade, procurement-related irregularities have increased sixteen-fold, with widespread reliance on single sourcing and restricted tendering inflating contract prices and inviting corruption risks.

Internal auditors are often excluded from the procurement process, and the system remains poorly integrated with public financial management controls. The consequences have been costly: a staggering GH¢99.57 billion lost to procurement irregularities over the last ten years.

This weak oversight has also contributed to massive cost overruns. In his 2025 State of the Nation Address, the President disclosed that 55 stalled infrastructure projects have saddled the state with an additional GH¢15 billion in costs—all tied to poor procurement practices, debt defaults and US$2.95 billion in undisbursed funds.

The Ministry of Finance tops the list of institutions with the most procurement breaches over the past decade, accounting for 34.3% of irregularities, followed by the Ministry of Health and the Ministry of Local Government.

Politics Still Drives Borrowing

The report also highlights the political-seasonality of Ghana’s fiscal behaviour. Borrowing spikes around elections and commodity booms, often guided more by political incentives than long-term economic prudence. Combined with fraudulent procurement practices, judgment debts arising from negligent state decisions, and currency depreciation, these factors continue to deepen Ghana’s debt hole.

A Call for Tougher Reforms

The analysis concludes that Ghana’s path to sustainable debt management depends on significantly improving revenue mobilisation, rationalising expenditure, enforcing strict procurement rules, and institutionalising regular Debt Sustainability Analysis (DSA) to guide borrowing decisions.

Civil society organisations are also urged to intensify advocacy around transparency and accountability, as the study notes a chronic lack of documentation, public communication, and coherent data in the debt management chain.

With another two years left under the IMF programme, Ghana stands at a crossroads. While recent stabilisation efforts offer a glimmer of relief, the deeper structural cracks remain unresolved. Without decisive reforms, the study warns, the nation risks continuing its long, exhausting dance with debt—a recurring spiral that has defined its economic journey for over half a century.

By PROSPER AGBENYEGA