S&P expects interest to take about 20% of Ghana's state income for four years

Pinned summary · as of 05:19

S&P Global Ratings expects Ghana to spend an average of 20% of its state income on interest over the coming four years, well below the level reached during the debt crisis. The agency links the improvement to the debt restructuring, a stronger cedi in 2025 and cheaper local borrowing, while cautioning that the war in the Middle East could reverse part of the gain.

What we know

• S&P Global Ratings projects that interest bills will absorb 20% of government revenue on average during the next four years. It called that share high, yet noted it sits far under the almost 48% recorded in 2021.
• The agency credits three things for the easing burden: the debt restructuring, the cedi's appreciation during 2025, and cheaper domestic borrowing after inflation and local rates dropped.
• According to S&P, yields on Treasury bills have come down to roughly 6.5% for the six-month tenor and about 10.1% for the one-year tenor, compared with nearly 30% at the close of 2024.
• Price growth slowed to 3.2% in March 2026 and edged back up to 5% by the end of August. Between 2022 and 2024 it had averaged 31% a year.
• S&P says the cedi has lost 9.2% of its value since January 2026, though it is still 43% firmer than the record low set against the US dollar in November 2024 (GH₵16.47).
• After a three-year freeze on new medium and long-term domestic bonds that followed the December 2022 restructuring, the government began selling longer-dated bonds again in 2026. S&P says this should stretch the maturity of local currency debt.
• S&P warned that fighting in the Middle East may wear away some of these gains by lifting inflation and borrowing costs and adding strain on the cedi.
• The Bank of Ghana kept its policy rate at 14%, and in July it cited inflation risks and external pressure from high oil prices as reasons for holding.

What's disputed / unconfirmed

• ?
  The Ghana Report, citing Bank of Ghana data, said banks charged 15.9% on average by late August 2026, down from 20.58% in January. Other reports have not confirmed this figure.
• ?
  NorvanReports said the central bank drew GH₵14.72 billion out of the financial system by selling 14-day bills at an annualised 10.5%. It added that the net amount withdrawn could be much smaller if proceeds replace maturing central bank paper, and that the tender notice gave no figure for maturing bills or bids received. No other report covers this operation.
• ?
  Chale News said S&P separately estimated that GANRAP, the drive to accumulate gold and reserves, might cost as much as 2.6% of GDP each year; no other report carries the estimate.

Why it matters for Ghana

When less of the government's income goes on interest, more is left for roads, schools, clinics and salaries in every region. Lower Treasury bill yields also feed through to what banks pay savers and charge borrowers, and Ghanaian households and traders watch the cedi and prices closely. S&P's warning shows these gains depend on oil prices and the exchange rate holding up.