Ghana’s credit rating upgrade by Fitch Ratings, from ‘Restricted Default (RD)’ to ‘B-’ with a Stable Outlook marks a key milestone in the country’s economic recovery. Coming on the heels of a similar upgrade by S&P Global Ratings to CCC+, this signals cautious optimism about Ghana’s fiscal path under the current leadership. While this progress offers hope, it must be tempered by realism. A credit upgrade is not a destination but a signal. A signal that Ghana must now double down on reforms, institutional credibility, and fiscal discipline to ensure a truly sustainable recovery.
While the successful renegotiation of $13.1 billion in Eurobonds and the ratification of a $5.1 billion bilateral debt agreement are certainly reasons for optimism, the path ahead is not without its hurdles. Persistent challenges in fiscal discipline, inflation reduction control, and the need for deeper structural reforms remain critical to Ghana’s sustained growth. As we delve into the country’s economic outlook for 2025, it’s worth noting to highlight key risks and with proposed actionable policy recommendations to ensure continued progress.
Notably, the arduous journey to normalize creditor relations has largely been a success for
Ghana, with a remarkable 96% of commercial creditors agreeing to new terms for the nation’s
Eurobonds. Negotiations continue for the remaining $700 million in commercial debt,
representing a mere 5% of the initial restructuring perimeter, with analysts suggesting low
holdout risks. The government has also secured vital agreements with bilateral creditors,
including the Paris Club and China, under the G20 Common Framework, further solidifying its
debt management efforts.
Though the risk of creditor litigation is low, challenges persist. Chief among them is Ghana’s $1 billion obligation to multilateral lenders like the World Bank and the African Development Bank (AfDB). These supranational bodies rarely accept principal haircuts, necessitating alternative
restructuring approaches. To mitigate these risks, Ghana must pursue concessional terms rather than outright write-downs, while strengthening its medium-term debt management strategy (MTDS) to prevent future defaults.
Ghana’s fiscal record still reflects the familiar strain of election-year spending. In 2024, Ghana’s primary fiscal deficit widened to 3.9% of GDP in 2024, far missing the 0.5% surplus target. Yet, an ambitious target of a 1.5% surplus for 2025 has been set, driven largely by aggressive expenditure cuts. But, the path to fiscal consolidation is fraught with challenges. Weak revenue mobilization, with tax compliance hovering around 13% of GDP, continues to limit the government’s fiscal space. To counter these issues, strict enforcement of expenditure controls, particularly on non-priority
spending, is crucial. Providing civic education on taxation and expanding digital tax collection
methods, such as the Ghana.gov platform, could significantly boost revenues. Also, government must ensure struct adherence to fiscal responsibility rules under the enacted Public Financial Management (Amendment) Act, 2025, to help institutionalize deficit limits and promote long-term fiscal prudence.
Inflation has declined to 18.4% (May 2025) and the outlook appears promising, with projections indicating a decline to 15% by year-end and a further reduction to 10% in 2026. This positive trend is supported by a strengthening Cedi, tighter monetary policy stance by the Bank of Ghana (BoG) expected to continue to mid-2025, and a global moderation in food and oil prices. Yet, geopolitical risks such as the Iran-Israel conflict could disrupt global oil supply and reignite inflationary pressures; Falling gold prices or shocks to FX reserves could reignite currency pressure; excessive government borrowing, could undermine the effectiveness of monetary policy. To guard against this, the BoG must maintain a cautious monetary policy stance until inflation firmly stabilizes within the 6-10% target. As well, FX reserves (currently at 2.6 months of import cover) must be rebuilt to hedge against external shocks.
Ghana’s current account surpluses are heavily reliant on gold and cocoa, which comprise 60% of total exports. Any volatility in commodity prices could destabilize macroeconomic gains. To counter this, Ghana must incentivize value-added manufacturing, particularly in processed cocoa and textiles. Improving port efficiency and customs automation, will also be critical in reducing logistics costs and boosting Ghana’s export competitiveness.
Ghana’s projected GDP growth of 4-4.5% for through 2026 is encouraging, driven largely by agriculture and services. But sustaining this growth and safeguarding the gains require serious reforms particularly in energy, credit access, and public finance.
The energy sector continues to grapple with high distribution losses and legacy debt, deterring much-needed investment. Cost reflective tariffs and utility reforms are necessary to attract investment. Additionally, The banking industry’s high Non-Performing Loans (NPL) ratio at 21.8 %, is restricting lending to businesses. Strengthening bank supervision is critical to improving credit flow and unlocking private sector growth.
In relation to governance, Ghana ranks in the 50th percentile on the World Bank Governance Indicators. While political stabile, corruption remains a red flag for investors. To foster a more robust investment climate, Ghana must prioritize enhancing anti-corruption measures, such as digitizing public procurement processes. Improving judicial efficiency is also paramount, as a transparent and effective legal system is crucial for bolstering investor confidence and ensuring a level playing field.
Ghana’s economic recovery is undeniably on track, but maintaining this momentum requires continuous vigilance and strategic action. To fully transition from recovery to resilience, the immediate priorities for 2025 must include finalizing pending debt restructuring to eliminate any lingering uncertainties, enforcing fiscal discipline to prevent potential election-year spending slippages, and actively diversifying the export base to reduce commodity dependence. Furthermore, strengthening governance and institutional frameworks will be key to enhancing investor trust and fostering long-term economic stability. By diligently addressing these challenges, Ghana can successfully transition from a period of stabilization to one of sustained growth, ultimately ensuring macroeconomic resilience for years to come.
About the Author
Dr. Philip Takyi is a seasoned Financial Security Expert and SBS Swiss Business School -Switzerland scholar. He also holds a Master’s in applied business research (SBS – Switzerland), MBA in Business Administration (UG -Ghana), EMBA in Cybersecurity (Ottawa University – USA) and has more than 20 years of experience in safeguarding financial assets, corporate governance, and risk management. He is a Fellow of several professional bodies and a recognized authority on financial security, fraud prevention, and digital transformation, with experience across Africa, Latin America, and the United States. He currently manages a consultancy firm in the United States (PTSolutionz Investments LLC) targeted at Community Development Financial Institutions that embrace Peer-to-Peer lending using cyber-driven technologies to address complex business challenges and serves on the Customer Advisory Board for Bank of America.
