Can Ghana sustain its recovery? -

By Prof. Samuel Lartey

Ghana’s economic recovery is entering a critical phase where improving growth indicators must now confront renewed debt accumulation and pressure on foreign exchange reserves.

The latest Bank of Ghana data present a mixed picture. While the economy continues to demonstrate resilience, rising domestic debt and fluctuations in international reserves raise important questions about fiscal sustainability, investor confidence, business competitiveness and household welfare.

Ghana’s total public debt increased from GH¢720.8 billion in May 2026 to GH¢733.9 billion in July 2026, representing an increase of GH¢13.1 billion within two months. After declining marginally to GH¢719.5 billion in June, the debt stock rose sharply in July.

Domestic debt accounted for much of the increase, rising from GH¢379.1 billion in May to GH¢396.7 billion in July, an increase of GH¢17.6 billion. In dollar terms, however, total public debt remained relatively stable, moving from US$61.5 billion in May to US$63.4 billion in June before easing to US$62.8 billion in July.

Indicator	May 2026	July 2026	Change
Total public debt	GH¢720.8bn	GH¢733.9bn	GH¢13.1bn increase
Domestic debt	GH¢379.1bn	GH¢396.7bn	GH¢17.6bn increase
Dollar debt stock	US$61.5bn	US$62.8bn	US$1.3bn increase

The reserve position has been equally dynamic. Ghana’s international reserves declined from approximately US$12.94 billion at the end of June to about US$11.4 billion by August 2026, equivalent to approximately 4.2 months of import cover. However, fresh Bank of Ghana data indicate that reserves recovered to about US$12.04 billion by 22 September 2026.

The recovery is encouraging, but the volatility remains significant. Governor Dr Johnson Asiama has indicated that Ghana’s current account could record a deficit in the third quarter because of slower gold shipments and higher service payments. This is particularly important because gold exports have become one of Ghana’s most important sources of foreign exchange.

Why the Numbers Matter

For government, rising domestic debt increases refinancing obligations and potentially limits the fiscal space available for infrastructure, education, healthcare, social protection and employment programmes. Government must therefore balance development spending with prudent debt management.

For businesses, excessive government borrowing can compete with private companies for domestic credit. If banks find government securities more attractive, businesses, particularly small and medium sized enterprises, could face tighter credit conditions and higher borrowing costs.

For investors, reserve adequacy, fiscal discipline and debt sustainability remain critical indicators of macroeconomic credibility. Stronger reserves provide protection against external shocks, support the cedi and strengthen confidence in Ghanaian assets.

For households, the transmission is direct. Exchange rate instability can increase the prices of imported food, medicines, petroleum products and production inputs. Higher borrowing costs can also affect mortgages, personal loans and employment creation.

Ghana should therefore prioritise:

Reducing excessive reliance on short term domestic borrowing.
Lengthening debt maturities and strengthening debt management.
Expanding gold, cocoa, agriculture and manufactured exports.
Accelerating domestic value addition to generate sustainable foreign exchange.
Maintaining fiscal discipline while protecting productive and social investments.

Conclusion

Ghana’s challenge is no longer simply how much it owes, but how effectively borrowed resources are converted into productive economic assets. The recovery in reserves to about US$12.04 billion provides some reassurance, but the rise in public debt to GH¢733.9 billion is a reminder that macroeconomic stability cannot be taken for granted.

The country must transform temporary improvements in reserves, exports and growth into lasting economic resilience. Fiscal discipline, export diversification, productive investment and responsible borrowing will determine whether Ghana merely manages its debt or converts its current recovery into sustainable prosperity.