Debt Restructuring Prospects Diminish for 2027/28, Warns IBA

Ghana may face challenges from its debt restructuring in 2027-2028. The Investment Bank of Africa (IBA) issued this warning regarding significant debt maturities. Early refinancing preparations will be necessary to manage these maturities. The IBA's report, titled Ghana Economic Framework & 2034 Outlook, noted improvements in Ghana's debt trajectory.

However, it emphasized that sustainable gains depend on prudent borrowing and transparency. Proactive management of upcoming maturities is also crucial. The report highlighted the 2027-2028 maturities as a major risk to fiscal stability. It urged the government to prepare early to avoid financial pressure and increased borrowing costs.

Recommendations included pre-funding through primary budget surpluses and multilateral support. Additionally, the IBA suggested stress-testing maturities against lower gold prices and a weaker cedi. These factors could negatively impact Ghana's foreign-exchange position and debt-servicing capacity. As Ghana aims to consolidate fiscal gains from recent debt restructuring, careful management is essential.

The IBA advised against recreating conditions that led to previous debt issues during the return to domestic markets. A medium-term domestic debt issuance plan should be published while extending maturities gradually. The report cautioned against returning to expensive short-term borrowing, which could increase refinancing pressures. For external debt, it urged completion of outstanding restructuring agreements with transparency.

Using improved fiscal conditions as a reason for aggressive borrowing was also discouraged by the IBA. They stressed that lower debt ratios should not lead to new cycles of guarantees or weak balance sheets. According to the IBA's central scenario, Ghana's public debt-to-GDP ratio is projected to decline from 45.1 percent in 2026 to 36.8 percent by 2034. This trajectory relies on continued fiscal discipline and effective reforms.

Maintaining a primary surplus and clearing arrears are vital for normalizing market access. Restrictions on new non-concessional borrowing were recommended unless projects promise strong economic returns or reduce imports. Greater transparency around Ghana's debt obligations is also necessary, including publishing detailed information about debts and guarantees. An investor data room should reconcile information from various financial institutions.

Several fiscal risks could undermine improvements in Ghana's situation, including issues with State-Owned Enterprises (SOEs) and energy arrears. The energy sector poses significant concerns due to estimated payments for energy shortfalls reaching GH¢19.7 billion. Reforms in both energy and cocoa sectors are critical for maintaining stabilization gains amid recurrent losses and arrears. Dependence on commodity revenues adds vulnerability to the overall debt outlook.

Gold remains Ghana's largest export but poses risks if prices fall significantly. The cedi's depreciation against the US dollar further complicates matters; it fell by 7.9 percent in early 2026. The IBA modeled a downside scenario where various negative factors push Ghana's debt ratio above 50 percent of GDP again by 2030-2034, resulting in weakened economic growth projections compared to their central scenario estimates. These scenarios serve as analytical planning tools rather than official forecasts from the government, with assigned probabilities reflecting different outcomes as of August 2026.

To protect existing gains, immediate priorities include avoiding renewed borrowing or contingent liabilities due to lower pressure on debt service costs. Implementing strategies for primary surplus maintenance is essential for improving the overall debt trajectory.