By Toma Imirhe
The Government of Ghana has started hoping that a key macroeconomic target for 2028 – that of reaching a public debt sustainability threshold of between 56% and 58% of Gross Domestic Product, could actually be achieved as early as the end of this year. This is coming on the back of the Cedi’s sharp appreciation against the United States dollar which has seen it appreciate more than 40% against the American green back this year – far outperforming its African and emerging market peers – and thus shrinking the cost of the country’s foreign debt and giving it more fiscal breathing room.
“We have reduced our total debt over the last five months by almost GHc150-billion, which is very significant” President John Dramani Mahama revealed at a session during the African Development Bank annual meeting in Abidjan last week, citing the cedi strength.
“If that trajectory continues, the target of reaching 55-58% debt sustainability by 2028 will be reached by the end of this year. And that means that it begins to give us fiscal space to begin to invest in the most productive sectors of the economy.”
The global standard for debt sustainability in emerging market economies, as set by the International Monetary Fund and the World Bank is a public debt to GDP ratio of 60% although some heavily indebted middle income countries outside of an IMF programme tend to regard the threshold as 70% of their GDP.
Ghana’s debt to GDP ratio had fallen to 70.5% of its GDP by the end of 2024, following fundamental restructuring of its public debt, down from an estimated 79.18% in 2021 which however did not include the country’s legacy energy debt and its debt overhang from the funding of a comprehensive financial services industry reform between 2017 and 2020. Indeed, computations that added on those debts put Ghana’s ratio at closer to 90%, persuading the IMF to insist that the country restructure its public debt towards sustainability before assenting to provide a three year Extended Credit Facility programme inclusive of a front-loaded US$3 billion financial bail out in 2023.
In all the cedi had gained 42% against the dollar since January, changing hands near GHc10.20 to the dollar as at mid last week before slipping a little towards the end of the week.
The rally, which has surprised some investors, is another much-needed boost for Ghana as it claws its way back from debt default and a punishing economic crisis.
While the dollar has also been under pressure this year, the cedi’s performance stands in stark contrast to other African currencies.
The cedi’s appreciation has been fueled by several factors, both external and internal one of them being the strategic interventions of the country’s central bank. The Bank of Ghana (BoG) has played a pivotal role through aggressive monetary tightening and forex market interventions
Another pivotal factor has been the commodity revenue windfall arising out of the ongoing price surges in two of Ghana’s main traditional exports, gold and cocoa. Surging gold prices—from US$2,000 per ounce in 2024 to US$3,400/ounce in May 2025— have boosted export revenues with Ghana earning US$2.72 billion from gold exports alone during first four months of 2025 up from US$900 million during the corresponding period of 2024.
Cocoa prices nearing US$10,000 per ton have further bolstered inflows, combining with gold, oil and non- traditional exports to take Ghana’s trade surplus to a long term high of US$4.3 billion in 2024.
Yet another factor has been the impacts of the ongoing three year International Monetary Fund programme, which includes an insistence on a return to demand management economic policies to restore macroeconomic stability after the near-chaos that reigned from late 2022 to late 2023.
Local Ghanaian holders of dollar debt exchanging their money back into cedis are also helping the gains.
There has been a key external factor too in that the dollar’s depreciation, driven by U.S. tariff wars and a falling Dollar Index (DXY) from 108 to 99 in 2025, have amplified the cedi’s relative strength.
However while Ghana now looks to reaping the benefits of a stronger cedi with regards to its debt sustainability it is by no means a given yet as potential headwinds still exist.
Tellimer’s Hasnain Malik, a sovereign country analyst and Lutz Röhmeyer, head of portfolio management at Capitulum Asset Management, have both warned that the cedi’s rally may not last, citing drops in oil and cocoa prices, as well as IMF forecasts that imply a possible coming depreciation.
