Country note: Ghana
In Short
By Anne Margrethe Tingleff, Senior Portfolio Manager, Global Evolution
We visited Ghana’s capital, Accra, in late Jan 25 just one month after the general election. We met with government officials, central bankers, and local corporates to gain a deeper understanding of the economic outlook under the new administration. Although the IMF did not believe there was much in the way of hidden debt (including arrears), the new administration is undertaking a process to reconcile fiscal numbers, which is expected to show a modest deterioration in public finances. However, the new administration appears determined to deliver fiscal reform necessary to restore order to public finances and keep the IMF program on track. The new administration also inherited an improving external balance, with a CA surplus enabling a gradual rebuilding of FX reserves. With election pressure on expenditure less of a priority moving forward, it appears likely that the post-crisis stabilization and gradual economic normalization are set to accelerate. Our main concerns remain fiscal. It is still unclear how much expenditure rose in the lead-up to the election. This, combined with continued fiscal pressure from energy sector arrears, adds to the uncertainty. We left Ghana cautiously constructive on debt investment opportunities moving forward.
Politics: Will This Time Be Different?
In December 2024, Ghana held its general election, resulting in a victory for the opposition. Former President John Mahama returned to office, becoming the first in Ghana to serve two non-consecutive terms. During his previous tenure (2012–2017), the economy experienced strong growth but faced fiscal mismanagement, external shocks, and rising debt.
Interesting, President Mahama is now presenting himself as the leader of a fiscally responsible party, after the previous NPP government needed to go to the IMF for financing and restructure public debt to prevent an even greater economic crisis.
The previous government secured a USD3.0bn IMF loan in 2022 contingent on restructuring both local and external debt to restore debt sustainability.
Under pressure from the IMF and external bond owners, the authorities restructured domestic bond holdings via an exchange program in 2023. In an unusual departure from international domestic bond market norms, the exchange delivered a principal haircut.
Although the process did assist in getting IMF calculations to acceptable levels of debt sustainability, it did effectively destroy the nascent domestic bond market, forcing the authorities to rely heavily on the short-term paper for financing.
After three years of negotiations with the IMF and creditors, the country successfully restructured its Eurobonds in Oct 24, together covering 96% of its debt. The sovereign still has commercial debt worth some USD2.8bn where the restructuring is still unresolved.
The government also faces contingent liabilities to energy companies over arrears that the government is disputing in the courts. Reforming the energy sector and particularly dealing with the tariff system remains a key IMF condition. However, vital reforms across the sector and the large state-owned Electricity Company of Ghana (ECG) and being held up by political and regulatory hurdles as the Public Utilities Regulatory Commission (PURC) board is currently dissolved.
Economic Growth: Strong Recovery
Ghana's post-COVID recovery saw 6.1% GDP growth in 2021, but momentum slowed to 3.8% in both 2022 and 2023 amid ongoing debt restructurings. Despite subdued growth in 2023, the industrial sector showed signs of recovery, driven by a rebound in resource- based industries.
That said, growth picked up into the elections in late 2024, with GDP registering 7.2% y/y in Q3:24. Although fiscal spending boosted services and construction, the economy was also boosted by the mining sector that was up a huge 17.1% y/y in Q3:24.
Chart 1: Real GDP Growth (%YoY & %YoY, 4q sum)
Source: Haver, Global Evolution
Gold mining companies have increased production over the past year, and the commissioning of new mines is expected to further boost output in the medium term. Additionally, a lithium project investment is set to support economic activity from 2026 onward.
However, the key cocoa sector struggled in 2024. Despite high cocoa prices, unfavorable weather and disease reduced output. According to Cocobod, Ghana’s government agency for cocoa production, output is expected to rebound in the 2024/2025 season, with improved weather conditions supporting stronger production.
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