Ghana is on course to beat its debt reduction goals three years ahead of schedule, as strong economic growth and tighter fiscal discipline continue to ease the country’s debt burden, according to analysts at Barclays Plc.

In a note to clients, Barclays economists Michael Kafe and Andreas Kolbe said Ghana’s debt-to-GDP ratio likely dropped to 54% in January 2025, down sharply from 61.8% at the end of December 2024. If confirmed, the figure would represent a major milestone, coming well before the 2028 target agreed with the International Monetary Fund (IMF) under a $3bn bailout package.

“Ghana’s public debt has eased earlier than expected, largely due to a bigger economy and fiscal restraint,” the analysts noted.

The Bank of Ghana is expected to release its official figures in the coming fortnight.

The sharp decline in the debt ratio comes on the heels of a turbulent period marked by Ghana’s default on its external obligations in 2022, which prompted the government to seek IMF assistance. Under the leadership of newly-elected President John Dramani Mahama, who returned to power after a decisive victory in the December 2024 polls, the administration has pledged to restore macroeconomic stability through more prudent fiscal management.

As part of that effort, Mahama’s government is targeting a significant reduction in the fiscal deficit - from 7.9% of GDP in 2024 to 3.1% in 2025.

While Ghana’s overall debt stock rose slightly in January - up 3.9% month-on-month to GHS755bn (about $57.4bn) - this was largely attributed to 10 billion cedis in fresh domestic borrowing and a 4% depreciation of the local currency against the US dollar.

Nevertheless, the expansion of the economy continues to cushion the debt ratio. Ghana’s nominal GDP is projected to rise to approximately GHS1.4 trillion in 2025, from around 1.2 trillion the previous year.

Barclays warned, however, that debt levels could see temporary increases as the government rolls out key development programmes. “Although Ghana is making progress, public debt could increase again as the administration scales up expenditure for key initiatives,” Kafe and Kolbe wrote.

Under the IMF programme, Ghana is required to bring its debt-to-GDP ratio to 55% by 2028 - a goal it is now poised to meet well ahead of schedule, signalling renewed international confidence in the country’s economic trajectory.