In recent years, Ghana’s public debt has been steadily rising, and as of November 2022, it amounted to GHS 575 billion, with GHS 382.7 billion being external debt and GH¢193.1 billion domestic debt. The COVID-19 pandemic-induced spending has contributed to widening the gap between revenues and expenditure, about 79% in 2020. The government secured approximately $1.5 billion from various development partners, including the IMF, World Bank and the African Development Bank (AfDB), to fund pandemic-related expenses in 2020, further increasing the country’s debt burden.

Despite requesting IMF assistance for the 17th time to achieve fiscal consolidation and debt sustainability, an analysis of Ghana’s governance structure suggests that the measures taken will only provide short to medium-term fiscal consolidation and balance of payments. Even after concluding the 16th IMF program in 2019, the Fund expressed concerns about Ghana’s fiscal vulnerabilities, and the country remained on this path. The government has identified revenue-generating measures through additional taxes, but these have not significantly contributed to the worsening debt distress and economic challenges.

The leading causes of Ghana’s public debt have been identified in this paper as stemming from inefficiencies in governance, which have been revealed in weak procurement practices, poor contingency planning and excessive spending over revenues, inadequate state institutions, and insufficient loan monitoring mechanisms. These must be addressed through long-term solutions to avoid a recurring cycle of seeking IMF support.

The discussion highlights that resolving Ghana’s debt requires more than just IMF programs. The governance structure needs significant changes to ensure accountability, efficiency, and effective policy implementation. Therefore, this report proposes the following recommendations for the government to consider:

1. There is a need for a national dialogue on the most effective procurement system that aligns with the Ghanaian context and delivers value to citizens.
2. Ghana should align its expenditures with its revenue to reduce deficit spending. Merely relying on GDP as a benchmark is insufficient, particularly when the disparity between expenditure and revenue is widening from 21% in 2018 to 52% in 2021.
3. There is an urgent need for a performance audit of all state agencies to establish optimal numbers of staff and administrative budgets for their operations.
4. The government must establish mechanisms to assess the effectiveness of expenditure and the capacity of projects to deliver value that facilitates loan repayments.
5. It is imperative that the private sector participates in the power sector with effective regulation by the state to ensure their delivery of value. Tier-two pension investments could be an option to mobilise domestic revenue for power sector investments. It is unacceptable for the government to spend billions of dollars to meet payment obligations resulting from poor management and procurement-driven investments.
6. The government should enforce laws transparently to encourage investments and assure investors of fair treatment in the energy and extractive sectors.
7. There is a need for active citizenship and frequent conversations on how governance addresses the country’s fiscal challenges. This requires the participation of the private sector, media and Civil Society on the broad governance challenges that could lead to debt unsustainability.