President John Mahama has given his fellow African leaders a reflection and lessons on Ghana’s journey in debt restructuring at the ongoing African Union Conference on Debt in Lome, Togo.
The three-day Lome Meeting, which is being convened by the African Union Commission’s Department for Economic Development, Tourism, Trade, Industry, and Minerals (ETTIM) is the theme: “Africa’s Public Debt Management Agenda: Restoring and Safeguarding Debt Sustainability.”
The conference will convene AU Member States, policymakers, financial experts, and key stakeholders, including representatives from Ministries of Finance, African central banks, regional economic communities, African Multilateral Financial Institutions, and Civil Society Organisations.
“Ghana, like many of our peers and neighbours, has had to undergo a very painful restructuring exercise to restore macroeconomic stability and rebuild investor confidence,” President Mahama said.
He added: “And so, is who better to speak on this theme than the Republic of Ghana? These facts are stark reminders that while debt can be a catalyst for transformation, it can also be the source of fiscal fragility and lost sovereignty if it is not well managed.”
He said Ghana’s debt history was emblematic of the broader African experience.
The Previous noted that in the early 2000s, under the Heavily Indebted Poor Countries (HIPC) initiative and the
Multilateral Debt Relief Initiative (MDRI), Ghana was able to slash its debt to GDP ratio from over 100 per cent to under 30 per cent.
Adding that this unlocked significant fiscal space and allowed for investment in education, roads, and the health sector.
President Mahama said between 2006 and 2015, successive governments, including mine, that’s in his first administration, strategically combined concessional and non-concessional financing to accelerate infrastructure development and social inclusion.
“Under my administration in 2015, Ghana entered into an IMF-supported extended credit facility programme to restore fiscal discipline, particularly in the energy sector,” he said.
President Mahama said however, in the years that followed, in a spillage of unrestrained borrowing, Ghana’s debt to GDP ratio went from as low as 56.3 per cent in 2016 to a peak of 90.7 per cent in 2022.
“We faced surging borrowing costs and currency depreciation, and by 2023, interest payments alone consumed 47 per cent of total government revenue, a level described by the World Bank as fiscally unsustainable,” he stated
“In 2024, through constructive engagement under the G20 Common Framework, Ghana reached a $5.4 billion debt restructuring deal with our bilateral creditors, providing essential breathing room, but the path to recovery continues to remain complex.
Ghana’s experience offers three key lessons.”
Firstly, timely and transparent engagement with the creditors matters.
He noted that delays only deepen the crisis. The President said secondly, multilateral support must be flexible and must be aligned with their domestic development priorities.
He mentioned that thirdly, sustainable debt was not just about to gross domestic product (GDP) ratio; and that it was about what the debt was used to finance and the governance that underpins that debt.
He said leaders of Africa must take some responsibility for the debt trap in which their countries find themselves.
President Mahama said in Ghana, over the last several years, there was an acceleration of debt accumulation, much of it going into budget support and consumption expenditure, and in a very poor governance environment.
Touching on what the new debt agenda for Africa was? President Mahama said: “If we are to shift from managing a debt crisis to unlocking debt as a tool for development, then Africa must adopt a new public debt management agenda that is rooted in three foundational pillars”.
“And the first one is transparency and accountability. Debt should serve the people.”
This, he said, means strengthening parliamentary oversight, enhancing public debt audits, and promoting open budget systems.
According to the IMF, less than 40 per cent of African countries publish detailed debt reports, which President Mahama said must change.
The President cited productive, efficient, and responsible borrowing, stating that borrowing must be tied to high-impact projects that deliver tangible returns to their people.
President Mahama said that in Ghana, they were prioritising value-added agriculture, renewable energy, road infrastructure, digital infrastructure, and health and education sectors.
He said all these sectors yield multiplier effects in jobs, exports, and innovation.
And the third is regional solidarity and global financial reform.
He said that with this, Africa must speak with one voice to push for a fairer global financial rule.
President Mahama said credit rating agencies must adopt methodologies that reflect the structural reforms and the growth potential of African economies, not just penalise for volatility that they did not create.
He called for building the capacity of African financial institutions such as the African Development Bank, the AfriExim Bank, the AFC, and the proposed African Monetary Fund to offer concessional financing tailored to Africa’s development reality.
“So what is working and what must change? And in this, I say innovation must guide our debt strategy,” President Mahama said.
He said debt for climate swaps could help countries finance resilience while easing repayment pressures, declaring that Barbados had led the way in this, and Africa should learn and follow suit.
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