Ghana’s president: Efficiency, transparency, and reform is Africa’s path to debt sustainability

The African continent is at a critical crossroads. The International Monetary Fund (IMF) estimates that global government debt will exceed 100 trillion dollars this year, while S&P Global Ratings predicts that sovereign defaults will become more common over the next decade. Many of these debtor countries will be in Africa—around twenty low-income countries in Africa are either bankrupt or at high risk of default.

Faced with mounting macroeconomic pressures and the upheavals of global crises, many nations are struggling to stay afloat. Unsustainable debt has too often prevented my country — Ghana — from realizing its full potential. Recently, Ghana successfully restructured thirteen billion dollars of international debt, offering important lessons to countries facing such problems and to the wider international financial community.

Lessons for debtor countries

Successful debt restructuring cannot be achieved until the state puts its house in order. An IMF-supported reform program that stabilizes the economy and lays the foundations for sustainable, inclusive and long-term growth is necessary. In Ghana, this meant restructuring domestic debt, reducing inflation, strengthening social safety nets, increasing exchange rate policy flexibility and tightening monetary policy. Ghana has also used this debt restructuring to refocus its medium-term policy vision on green investment and development projects that will help us meet our climate goals while fostering sustainable growth and creating new, well-paying jobs for Ghanaians. This will ensure that Ghana not only leaves its debt challenges behind for good, but re-emerges on international markets stronger.

Second, Ghana’s proactive approach in negotiations with the IMF, bondholders and the official committee of creditors enabled rapid progress towards the Group of Twenty (G20) Common Framework. The negotiations lasted only two years, which is what they became the fastest so far. We have adapted to move at the speed of the market and aligned Ghana’s internal bureaucracy to respond more quickly to creditor feedback and proposals. The inclusion of African advisers with a deep understanding of financial markets, local knowledge and key stakeholders, as well as the ability to navigate Ghana’s bureaucracy, was critical to getting the deal across the finish line – an important lesson for other countries.

Finally, countries must prioritize transparency in order to regain the trust of their creditors, investors and international partners. IN The case of Ghanawe committed to regular publication of the public debt portfolio, strengthened the supervision of debt issuance by public entities and digitalized debt management to improve transparency and efficiency. These are all policies that were which is supported and recognized by the IMF. These reforms have helped strengthen the confidence of our private and international partners and demonstrated that Ghana is planning for long-term fiscal stability and sustainable growth. Ghana’s priority now is to ensure that we do not need future restructuring, which would undermine the market confidence we have worked hard to restore.

The case of Ghana shows that the G20 Common Framework is addressing its growing problems. The common framework has gone a long way in improving coordination between traditional and non-traditional creditors and accelerating the pace of restructuring. However, the international financial community must continue to increase these coordination efforts to further improve the speed and effectiveness of the Common Framework. Waiting two years to re-access international markets may not seem like a long time, but it is still holding back economic progress. Fast, transparent and fair processes in the international financial system benefit not only debtor countries but also the global economy.

In addition, many African nations are actively reforming and building stable, growth-oriented economies, but are constrained by international perception. While political and geopolitical dynamics naturally affect credit ratings, as they admit United Nations Development Programmeit is necessary that these standards are applied fairly and consistently. Credit agencies should ensure sufficient resources on the ground to understand the continent’s complexities for their qualitative assessments of policies and geopolitical dynamics. The international financial community must reassess whether risk assessments accurately reflect today’s reality or are influenced by misperceptions.

Ghana is a stable democracy and an important trading partner on the global stage. Despite this, distorted risk perceptions continue to hinder access to capital, driving up interest payments and stifling development. These biases are costing Africa billions—funds that could otherwise be invested in infrastructure, health, education, and economic growth.

The international financial community can foster a fairer financial environment by working together to address these inequalities. This will benefit African countries and, more importantly, contribute to a stronger and fairer global economy. I hope that the case of Ghana can serve as a catalyst to continue accelerating the pace of restructuring and improving the international financial system so that it can be a driver of inclusive growth, poverty reduction and global innovation.

Nana Addo Dankwa Akufo-Addo is the President of the Republic of Ghana.

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Image: Accra Fishing Port, including the old fishing port and the construction site of the new fishing port. IMAGO/Joerg Boethling via Reuters Connect