Ghana’s long road through debt: From post-independence crises to DDEP

Ghana's payment of GH¢10.82 billion to Domestic Debt Exchange Programme bondholders on August 19, 2026, signifies more than a mere coupon payment. It marks the latest chapter in a debt narrative that spans nearly seven decades. The Government settled the debt entirely in cash, adhering to the DDEP payments since 2025, totalling GH¢41.36 billion. This settlement represents the third cash payment made, yet the DDEP was not Ghana's initial experience with debt distress.

Since gaining independence, various governments have sought to tackle recurring debt pressures through creditor rescheduling, austerity, structural adjustment, debt forgiveness, IMF programmes, and fiscal consolidation. The 2022 crisis, however, delved much deeper into Ghana's domestic financial system, necessitating a restructuring of obligations held by its own banks, pension funds, insurers, institutions, and citizens.

The genesis of Ghana's sovereign debt problem can be traced back to post-independence rapid industrialization and infrastructure development, largely financed through foreign suppliers' credits. By 1965, the Government had entered into 222 loan and credit commitments, amassing nearly US$700 million in external debt, while reserves dwindled.

Consequently, Ghana negotiated debt rescheduling in 1966, 1968, and 1970, with the first two arrangements lowering payments on affected suppliers' credits to roughly one-third of their original schedules.

The early 1980s witnessed external payment arrears reaching about US$580 million, amid collapsing output, inflation, and foreign exchange shortages. The subsequent Economic Recovery Programme, coupled with IMF and World Bank support, fiscal adjustment, currency reform, and market liberalization, led to a growth recovery and a decline in inflation. Nevertheless, adjustment imposed significant social costs.