Public debt stands at GH¢721bn - President Mahama reveals

Ghana’s public debt currently stands at a staggering GH¢ 721 billion, President John Dramani Mahama has said.

This is in addition to the several state-owned enterprises (SOEs) that are also in debt.

The SOEs include the Electricity Company of Ghana (ECG) which is indebted to the tune of GH¢ 68 billion and the Ghana Cocoa Board (COCOBOD) which is equally highly indebted to the tune of GH¢ 32.5 billion.

“Ghana Cocoa Board (COCOBOD), the hope of cocoa farmers, is also highly indebted. Its balance sheet indicates a total debt of GH¢ 32.5 billion, of which GH¢ 9.7 billion is due to be paid at the end of September 2025,” the President said.

Crop season

“In the 2023-2024 crop season, COCOBOD was unable to supply 333,767 metric tons of cocoa, which it had sold at $2,600 per ton. As a result, the then management of Cocoa Board rolled over these contracts into the 2024-2025 season.

This implies that for every ton of cocoa delivered this year in fulfillment of the rollover contracts, COCOBOD and Ghanaian farmers are going to lose $4,000 in revenue,” President Mahama said in his first State of the Nation Address yesterday after assuming the presidency following his victory in the 2024 election.

He said the COCOBOD had supplied 210,000 tons out of the rollover contract, resulting in a revenue loss of $840 million for both Cocoa Board and the Ghanaian farmer.

“Cocoa Board and the Ghanaian farmer will lose another $495 million by the time the Board finishes supplying the remaining rollover contracts.

Additionally, Cocoa Road commitments alone total GH¢ 21.7 billion, of which only GH¢ 4.4 billion is included in the total debt of $32.5 billion.

“This debt has arisen mainly because of the decision in 2019 and 2020 to award road contracts worth over $1 billion because of the election.

The energy sector faces significant financial challenges, primarily due to collection and system losses, non-compliance with the cash waterfall mechanism, and legacy debts.

The financing shortfall has risen considerably to approximately $2.2 billion, or GH¢ 34 billion for 2025,” he said.

Measures

Urgent measures, President Mahama said, would be needed to reduce it to sustainable levels and ultimately eliminate it.

He said the financial sector continued to struggle despite the reported spending of GH¢29.9 billion on the financial sector cleanup exercise up to date, and that scant reserves were also left for debt servicing despite implementing what might be considered the most severe and distressing economic policy in the annals of the Fourth Republic, if not in the entirety of our nation's history, “and I'm referring to the Domestic Debt Exchange Programme.”

President Mahama said that was in stark contrast with the government’s actions in 2017 before it left office when it allocated $250 million to the Sinking Fund handed over to the incoming government to service the country's debts.

“There have been claims that buffers were left for oncoming debt repayment this year.

Let me give you the statement of account for the debt service reserve account, which is also popularly referred to as the Sinking Fund.

Fund

“This fund shows a balance of only $64,000 in the dollar account, and GH¢ 143 million in the cedi account.

The repercussions of the accumulation of debt and economic mismanagement will require extensive work and sacrifice to repair. 

“In the next four years, our debt servicing will amount to GH¢280 billion, comprising $150 billion for domestic debt and $130 billion in external debt servicing,” he said.

President Mahama said the country’s catastrophic debt position had severely impacted infrastructural projects that should have been completed, and that currently, there were 55 stalled projects due to the default of debt and subsequent restructuring, with a total value of $2.95 billion not disbursed.

The stalling of those projects, he said, was expected to result in a cost overrun of about GH¢ 15 billion.

Notwithstanding this gloomy background, “I remain committed to leading this government and taking every necessary step to reset our economy, getting things back on track, and working with the good people of our country to build the Ghana we want.

He said the government had discovered that the country’s economic problems were much deeper than was previously known.

“We have inherited a country that is broken on many fronts.

The profundities of the challenges confronting us are staggering.

We are saddled with staggering debts and glaring signs of almost deliberate and in some cases reckless mismanagement of our resources. 

“Mr Speaker, not even the restraints of an IMF programme were enough for the previous economic managers to exercise prudence in managing our finances,” he said

He said after setting an inflation target of 18 per cent by the end of 2024, the actual outturn was 23.8 per cent, significantly higher than the threshold agreed with the IMF.

He added that the Ghana cedi continued its downward slide, losing 19 per cent of its value against the dollar in 2024 and that it had already lost 27.8 per cent of its value in the previous year.