By:Hamza Lansah Lolly) Ibrahim Issah
Ghana’s domestic debt has surpassed its external debt for the first time in several years, reflecting the government’s growing dependence on the local debt market to meet its financing needs. According to the Bank of Ghana’s September 2025 summary of economic and financial data, domestic debt stood at GH¢323.7 billion, representing 23.1% of Gross Domestic Product (GDP), while external debt amounted to GH¢305.0 billion, equivalent to 21.8% of GDP.
The increase in domestic borrowings is attributed to expected coupon payment obligations of government on both tendered and untendered bonds in February and August 2025, necessitating higher borrowings to build buffers. The public debt stock at the end of July 2025 was GH¢628.8 billion, representing 44.9% of GDP, reflecting a decline of GH¢98 billion compared to GH¢726.7 billion (61.8% of GDP) recorded at end-December 2024.
Ghana’s Debt Dynamics Shift as Domestic Borrowing Increases.
The Bank of Ghana has attributed the surge in domestic debt to the government’s need to honor its coupon payment obligations on both tendered and untendered bonds in February and August 2025. This development highlights a significant shift in Ghana’s debt composition, with domestic debt emerging as the key driver of the country’s public debt trajectory.
The government’s strategy to rely heavily on the domestic market might ensure short-term liquidity and control exchange rate risks. However, in the long term, it risks creating competition between the state and the private sector for limited financial resources. Economists caution that the growing dependence on domestic borrowing could place undue pressure on local financial institutions and crowd out private sector credit.
Total Public Debt Declines Despite Domestic Surge
Despite the surge in domestic debt, Ghana’s total public debt stock declined to GH¢628.8 billion at the end of July 2025, down from GH¢726.7 billion (61.78% of GDP) recorded at the end of December 2024. The decline is attributed to the combined effects of exchange rate appreciation and a slower pace of debt accumulation.
The government remains committed to fiscal consolidation, with various measures in place to reduce debt and improve revenue mobilization. The drop in the debt stock provides some relief as the country works to stabilize its economy and regain investor confidence.
